Firm bagged £165,000 in commission from 29 TEP sales
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The adviser firm which the FSA censured earlier today pocketed £165,000 in commission for the 29 geared traded endowment policy sales it made over the period covered by the regulator’s enforcement action.
The figure equates to approximately £5,700 per geared TEP sold.
The FSA’s final notice for The Garrison Finance Centre Limited reveals that the Yorkshire based IFA escaped a £35,000 fine because it is in liquidation and the regulator wanted to safeguard any remaining funds to pay client redress.
All the TEP sales were made by a single adviser at the firm, although the individual is not understood to be subject to separate enforcement action.
Several of the firm’s clients remortgaged their properties in order to take out the geared TEP policies, however they were not warned of the risk to their properties through this gearing.
Only one of the clients was warned of the possibility that they might have to inject further capital to keep their TEPs going.
The FSA found that in some cases clients’ attitude to risk was not recorded and in instances where they were, the risk profile was not consistent across all documentation.
In some cases the recommendation to take out a geared TEP did not match the customers’ risk profile.
Documents sent by Garrison to clients often lacked clear or balanced information to enable to make an informed judgement on whether or not to accept the product recommendation.
A review by an external compliance consultant found that all the TEP sales over the period failed to comply with FSA principles.
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Readers' comments (2)
Anonymous | 30 Jul 2010 4:58 pm
This case proves that no matter how much regulation you have one bad egg will always cause a stink.
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Julian Stevens | 30 Jul 2010 7:04 pm
For how long were these activities going on before the FSA decided to investigate?
One might reasonably expect them to have been readily identifiable from the firm's Gabriel returns, which would have shown what types of business were being transacted and the levels of commissions being generated by them.
Does anyone at the FSA analyse the actual content of the Gabriel returns or is it just a matter of insisting that all the right boxes have been ticked and that the figures entered look generally plausible?
Of course, I may be wrong and the FSA's investigation was triggered by the very first return, in which case we may assume that the system is working as intended. But it would be interesting to know.
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