FSA censures Park Row - Peter Sprung fined
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The FSA has publicly censured Park Row and fined former chief executive Peter Sprung £49,000 for failing to ensure sales were suitable.
The FSA says the firm failed to ensure its sales were suitable and has ordered Park Row’s parent company Royal Liver to pay customer redress estimated at between £5m and £7.8m.
It has also fined Peter Sprung (pictured), the firm’s former chief executive, £49,000 and has withdrawn his approval to perform a controlled function at Park Row. He has also undertaken not to perform a significant function at any firm for five years.
Money Marketing first revealed news of the FSA investigation in March 2009. Between January 2007 and January 2009, the FSA says a number of serious failings by Park Row were identified in relation to the suitability of its customer advice. It says it failed to ensure that advisers properly evidenced the suitability of sales, failed to ensure advisers offered suitable advice to customers and did not ensure that its systems and controls were adequate.
The FSA says the firm “consistently” failed to take action to rectify the problems despite the fact that concerns were highlighted to the firm on a number of occasions.
Sprung, who was chief executive of Park Row between January 2007 and January 2009, has been fined for “falling short of what was expected of a senior manager of an authorised firm”. The FSA says he failed to take steps to ensure that the firm and its advisers properly evidenced suitable sales, in particular in relation to pension advice.
The regulator says Park Row advisers sometimes provided advice in relation to certain products on which they were not authorised to advise and it was identified that there was a danger that some of them may have selected products based on the fact that they would receive higher commission.
FSA director of enforcement Margaret Cole says the FSA has secured funding estimated at between £5m and £7.8m to ensure that where customers were not given suitable advice, or where Park Row can not demonstrate suitable advice, they will receive redress with support of the firm’s parent company, Royal Liver Assurance Limited.
She says: “As chief executive, Sprung was responsible for ensuring that there were appropriate systems and controls at the firm and that it treated its customers fairly. He failed to do this despite being given the opportunity to do so on a number of occasions. As a result, he has been fined and can no longer work in a significant influence function for five years.”
The FSA says the firm’s breaches were severe enough to impose a financial penalty of £2.4m, were it not for the fact that the firm can not pay such a fine and is currently undertaking an orderly wind-down of its business.
Sprung also co-operated fully with the FSA and settled at an early stage of the FSA’s investigation and therefore qualified for a 30 per cent discount. Without the discount, the fine would have been £70,000.
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Readers' comments (37)
Christian Patricot | 24 Feb 2010 11:31 am
You don't say: some advisers may have selected products that paid the highest commission. Surely not!
I am a "one man band" IFA. I have never truly understood how if you run a bank, a life assurance company or a firm of employed IFAs, your advice might not run the risk of being compromised when your first priority is to generate sufficient income to pay for overheads: salaries, PAYE, NIC, rent, utilities, regulatory fees. The larger the firm, the greater the absolute need to generate income day in, day out. That means chasing volume in terms of sales generated per customer and number of customers. In my opinion, those objectives are mutually incompatible with the provision of independent advice.
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Anonymous | 24 Feb 2010 11:33 am
Plenty more firms like that out there. I doubt £49k will do the great man too much harm.
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Anonymous | 24 Feb 2010 11:36 am
Maybe the FSA will stop punishing the majority of decent advisers suffering vast financial hardship. Did Park Row give all the information relevant to the solveny wind down or did they know advisers would be treated shamefully.
It's time to act FSA let ex Park Row advisers work you have authorised most of the bad ones elsewhere allready
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Bob Donaldson | 24 Feb 2010 11:39 am
Didn't I read recently that Park Row has nearly the highest number of certified financial planners in any firm. I think that they were third in the list.
It is incredible that such a 'well respected' firm should be found to be giving advice when not authorised in certain areas regardless of the high commission selling.
No wonder our industry has such a bad name!
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Hugh Jeego | 24 Feb 2010 11:44 am
Standby FSCS! Here comes another one!
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Evan Owen | 24 Feb 2010 11:55 am
Point, fine, ban.. That's regulation for you, isn't hindsight a wonderful thing?
Get a grip FSA, want a list of people and things who could do with some 'supervision'??
Despite the fact that the FSA thinks it is my 'duty' I won't be doing it for free Lesley....
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Richard Smith | 24 Feb 2010 12:10 pm
The FSA make me smile, imagine getting arrested for Drink Drive, and
Blowing down the tube as requested, and
behaving at the Police Station and
turning up at Court on time only to find that local Magistrate lets you off with a £50 fine and a 6th month Driving Ban for co-operating. The Newspapers would outraged and so they should.
So the man was clearly not doing his job and acting wrongly and had several warnings it seems. Clients would have been disadvantaged etc etc and the FSA has seen fit to reduce the fine.
No wonder there is no faith in any of these organisations.
Richard Smith IFA and Tech Consultant.
http://www.theinternetconsultancy.com
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George Jensen | 24 Feb 2010 12:59 pm
It is a shame that a company which undoubtedly has some strong, well qualified advisers ends in a manner such as this.
The signs had been there for a number of years, indeed Peter Sprung inherited the problems - consistent losses, large fixed costs and overheads, lack of strong direction, advisers allowed to do whatever they want - the story writes itself.
GJ
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Anonymous | 24 Feb 2010 1:06 pm
As an ex-employee of Park Row I can say that Peter Sprung is actually a sweet and lovely individual. Its just unfortunate that he wasnt strong enough to stand up to other people and make the harsh desicions that should have been made to get Park Row on track.
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Bemused | 24 Feb 2010 1:12 pm
It seems strange to me that comments call for Park Row advisors to be authorised, on the day the enforcement action says Park Row advisors gave customers unsuitable advice.
An investigation into the firm and into advisors where customers have been financially disadvantaged or cases were so poor it wasn’t possible to tell whether customers were disadvantaged does not seem so unreasonable. That some of these files could relate to occupational transfers seems utterly ludicrous and it does not appear to be sufficient to blame the overall failing of the company. Any ‘qualified’ advisor daring to provide deficient advice or incapable of completing the paperwork should down grade their career to a maximum level of flipping burgers. Would you really want one of these advisors working for your firm?
The industry has proven itself incapable of self regulation, and the regulator has been caught short. Change is required. However, solutions for a fit for purpose regulatory system will never be found while practitioners in the industry can only react negatively to any piece of news. As a positive, this investigation may mean that that these advisors may not be let loose near a customer again.
Maybe instead of knee jerk comments, the quality advisors amongst you could think about how, as an industry, you can help prevent the rubbish advisors giving all IFAs an undeserved bad name.
At this point in time it could be suggested that some of the individuals in this forum have the regulator they deserve.
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