The FSA has fined a director of an IFA network £49,000 for management failings in monitoring pension-switching advice.
The regulator took action against Charles Palmer, director of IFA network Financial Ltd, for the failings which resulted in poor compliance monitoring on pension-switching advice during a period of rapid expansion.
The Gloucestershire-based network described its app roach to compliance as “laidback” in a newsletter to advisers.
Financial Ltd owns IFA TV and Palmer regularly presents videos on the website. One of the company’s videos, which did not feature Palmer, looked specifically at where the FSA is heading next with its pension-switching visits, while a second video talks in detail about the FSA’s crackdown on pension-switching advice.
In its investigation, the FSA found shortcomings in how Financial Ltd allocated responsibility for monitoring advisers, which led to concerns about the quality of pension-switching advice given between April 2006 and August 2008.
Financial Ltd has agreed to carry out a review of past business and will pay redress if unsuitable advice was given.
In Palmer’s final notice, the FSA says the firm’s newsletters were “not of a professional standard”. It quotes one as saying: “We have a laidback approach to compliance. All members are experienced IFAs.”
The FSA says: “There was a risk that members would be adversely influenced or interpret the firm’s communications as evidence of a culture in
which ins ufficient reg ard was paid to complying with requirements aimed at treating customers fairly.”
Palmer failed to recruit adequate staff or put in place effective systems and controls to cope with the demands of the exp anding business, according to the FSA.
From 2003 to 2008, the number of appointed representatives increased from 26 to 168 while the number of staff rose from 24 to 40.
The FSA says no clients “app eared to have suffered any loss” as a result of the breaches but it claims there was significant risk arising from the deficiencies in monitoring the quality of pension-switching advice given by member firms.
Financial Ltd made 1,151 pension-switching recommendations to customers since April 6, 2006. The FSA reviewed a sample of files and found a number lacked the detail required to demonstrate that the advice given was suitable.
This is the second fine to result from the FSA’s pensionswitching probe after it fined RSM Tenon Financial Services Limited £700,000 last week for failings in its advice and sales processes for Lehman-backed structured products and for failing to prevent unsuitable advice on structured products and pension switching.