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Banned network boss: ‘There was no malice involved’

Boss of compliance business ex-Financial Limited chief now chairs says there is “no better informed source” on FCA matters as Charlie Palmer defends integrity

Royal Court of Justice High Court 480The banned boss of network Financial Limited Charlie Palmer has defended his actions after a court upheld FCA sanctions against him.

In an Upper Tribunal ruling yesterday, the FCA’s ban and £86,500 fine against Palmer for oversight failings of the network’s advisers was upheld.

It is the second fine Palmer has received after also falling foul of previous regulator the Financial Services Authority in 2009 over pension switching advice risks.

In a letter seen by Money Marketing sent to members of the compliance business Palmer now chairs, IFA Compliance, Palmer explains “his side of the story”.

FCA wins battle to ban former network boss

Palmer says that the Tribunal agreed “there was no malice involved” and that there was no case that the network’s business model in itself was inappropriate.

Palmer writes “I am pleased and gratified that, despite the differences in view between us, at no stage, has the FCA ever challenged my honesty and integrity or questioned my belief that I was acting in the best interests of my clients and the AR clients…I support the FCA’s agenda, they have a difficult job to do as the complexities of this case has shown.

“I am proud to have invented the UK’s first fee only network….May I also thank the IFA industry for being so supportive of me during this long period.”

Palmer admits that Financial Limited’s advisers’ files “fell short” when it came to unregulated collective investment schemes and pension switching. However, he claims that files overall “consistently outperformed” the results of the FCA’s review of suitability earlier this year.

He writes that overall suitability was above 90 per cent – the FCA review said 93.1 per cent of the cases showed suitable advice – and that at least 75 per cent showed adequate disclosure, compared to just under 50 per cent in the FCA’s review.

“No better source of knowledge”

IFA Compliance helps advisers obtain FCA authorisation and complete regulatory returns. Chief executive John Downs signs off Palmer’s letter by saying that Palmer’s experience dealing with the FCA is valuable for the firm.

Downs says: “We have now ten members of staff at IFAC and we would like to re-assure you that it is business as usual, if not with renewed vigour and energy…Our relationship with the FCA is excellent and entirely unaffected by this case that has finally ended after more than five years.

“The experience in our firm is second to none. Firms who run into difficulty with the FCA have no better informed source of knowledge in the industry than Charlie. Unlike so many compliance staff, accountants and lawyers he has actually carried the responsibility as founder and chief executive of a top ten IFA firm – managing over 500 AR firms and hundreds of members of staff who inevitably will make mistakes and breach internal procedures and sometimes FCA rules.”

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There are 6 comments at the moment, we would love to hear your opinion too.

  1. The Tribunal found a number of key points in my favour which I am grateful for

    1.There was no malice involved (59)

    2.The Firm’s culture was indeed one of regulatory compliance (98)

    3.I did not fail to ensure adequate systems and controls were in place to deal with the risks (218)

    4.I did not fail to supervise my co-directors appropriately (222)

    5.I did not adopt nor develop an inappropriate business model. (223)

    I am proud to have invented the UK’s first fee only network.

    The Firms’s AR files fell short in UCIS and pension switching, but overall consistently outperformed the FCA’s thematic review on suitability conducted this year. Overall suitability of advice was above 90%, and overall suitability of disclosure above 75% even five to seven years ago. For IFAs less than 50% of the files the FCA reviewed across the industry in their thematic review were deemed suitable just this year.

    I am pleased and gratified that, despite the differences in view between us, at no stage, has the FCA ever challenged my honesty and integrity or questioned my belief that I was acting in the best interests of my clients and the AR clients. I am pleased also that at no stage has the FCA ever suggested that I was not a fit and proper person to continue to work as a consultant or adviser within the industry. I support the FCA’s agenda, they have a difficult job to do as the complexities of this case has shownThe Tribunal found a number of key points in my favour which I am grateful for

    1.There was no malice involved (paragraph 59)

    2.The Firm’s culture was indeed one of regulatory compliance (98)

    3.I did not fail to ensure adequate systems and controls were in place to deal with the risks (218)

    4.I did not fail to supervise my co-directors appropriately (222)

    5.I did not adopt nor develop an inappropriate business model. (223)

    I am proud to have invented the UK’s first fee only network.

    The Firms’s AR files fell short in UCIS and pension switching, but overall consistently outperformed the FCA’s thematic review on suitability conducted this year. Overall suitability of advice was above 90%, and overall suitability of disclosure above 75% even five to seven years ago. For IFAs less than 50% of the files the FCA reviewed across the industry in their thematic review were deemed suitable just this year.

    I am pleased and gratified that, despite the differences in view between us, at no stage, has the FCA ever challenged my honesty and integrity or questioned my belief that I was acting in the best interests of my clients and the AR clients. I am pleased also that at no stage has the FCA ever suggested that I was not a fit and proper person to continue to work as a consultant or adviser within the industry. I support the FCA’s agenda, they have a difficult job to do as the complexities of this case has shown.

  2. Mr Palmer

    So why did the Tribunal uphold the fine and ban imposed on you?

    Whilst I feel some sympathy for your staff, how can you continue to operate a compliance support company?

    If it ever came to a disagreement between the FCA and an adviser who had acted on advice from your compliance support company, how sympathetic are the FCA likely to be.

  3. “I am pleased also that at no stage has the FCA ever suggested that I was not a fit and proper person to continue to work as a consultant or adviser within the industry. I support the FCA’s agenda, they have a difficult job to do as the complexities of this case has shown.”

    Mr Palmer, I think the Decision Notice says otherwise.

    “On 25 September 2015 the RDC issued a Decision Notice in respect of Mr Charles Palmer, imposing a financial penalty of £86,691 and prohibiting Mr Palmer from performing any significant influence function in relation to any regulated activity carried on by an authorised person, exempt person or exempt professional firm for breaches of Statement of Principle 6 of the FCA’s Statements of Principle for Approved Persons.

    The RDC found that in the period 24 February 2010 to 20 December 2012 Mr Palmer, in carrying out his CF1 (Director) controlled function at Financial Limited and Investments Limited (“the Firms”), failed to exercise due skill, care and diligence in managing the business of the Firms for which he was responsible in his controlled function.”

  4. As posited elsewhere, Mr Palmer seems to have fancied himself as sort of swashbuckling maverick who could get away with ignoring all and any instructions from the regulator and carry on according to his own standards. Stupid or what?

  5. Charlie Palmer is an honest down to earth guy who was shackled into silence first by the FSA then the FCA. I joined Financial in 2009 and at that stage all our files in relation to pension transfers had to be checked by there compliance DEPT before we could do the business and we also had 2 visits by a compliance manager each year looking at the controls we had in place.

    It seesm to me that Charlie said to many things about the reputation of the FSA/FCA and as we know they are dictators and we are not allowed to answer them back without some fear of retribution from them.
    Good Luck Charlie.

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