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FCA: 80% of Financial Ltd Ucis sales could be unsuitable

The FCA says 80 per cent of Financial Limited’s Ucis customers may have received unsuitable advice after finding “systemic weaknesses” in the network’s systems and controls.

The regulator has today banned Financial Ltd and Investments Ltd from recruiting new ARs and individual advisers for four and a half months.

Were it not for the firms’ financial position, the FCA would have imposed a £12.6m fine on Financial Ltd and a £621,583 on Investments Ltd.

The FCA has ordered the firms to conduct past business reviews in relation to pension-switching recommendations and promotion and sale of Ucis, which may result in redress being paid to consumers.

The regulator says between 20 August 2008 and 30 April 2013, Financial Ltd sold 322 Ucis funds to 252 customers.

Of these customers, the regulator says 80 per cent may not have been eligible for promotion of Ucis funds and/or may not have received suitable advice.

At its peak, Financial Ltd was responsible for 400 ARs and 500 individual advisers, who gave advice to over 60,000 customers.

The FCA says all of these customers were exposed to a “significant risk” of unsuitable advice.

Investments Ltd advised 1,407 customers over the relevant period. It undertook 24 sales of Ucis funds to 22 customers.

In response to an FSA thematic review on Ucis, in August 2012 Financial Ltd banned its ARs and advisers from selling Ucis.

However, following discussions with the regulator this ban was lifted by the network in August 2013, to allow it to provide independent advice under the RDR. 


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. If I understand the position correctly, This network
    1. Have had a £12.3m FCA fine waived due to their financial position
    2. Are banned from recruiting for the rest of 2014
    3 Up to 80% of UCIS sales may constitute bad advice ( with redress required?)

    Is it me or does this network have a limited future?

  2. Martin Bamford 23rd July 2014 at 3:15 pm

    Best case scenario here is Financial Ltd remains solvent long enough to compensate these customers for unsuitable advice, to avoid the rest of us having to pay for their misdemeanours through the FSCS.

  3. John Cartlidge 23rd July 2014 at 5:44 pm

    The 80% is the number of cases were more information is needed, not the number of compensation cases. Notwithstanding, PI is in place and covers these cases anyway.

    The fine is the recruitment ban of 4.5 months or 126 days, so end of November.

    The monetary fine figure quoted relates to the entire network turnover* for a 5-year period and not Financial Limited’s own turnover of around £5m. (All firms / AR’s, this ranges from around £25m in the year to March 2011, to around £36m in the year to March 2014.)

    Financial is profitable, and provision for potential redress has reduced significantly over the last few years as identified issues have been resolved / settled etc.

    Yes, I am an AR of Financial Limited, and have the facts to hand, as should whoever writes this uninformed sensationalist drivel and a fair few of those commenting here.

  4. Julian Stevens 23rd July 2014 at 9:06 pm

    Dear, oh dear, it’s not a rosy outlook is it? What’s the quantum of these unsuitable investments (not to mention the possibly unsuitable pension fund switch recommendations which may lead to further orders for redress)? And how hopelessly inadequate must Financial’s control systems have been to have allowed so many such cases through? Then again, wouldn’t they have shown up on its yearly RMAR’s? Didn’t the FSA/FCA notice? Or was it just a case of provided all the balances tallied, that was good enough?

    I imagine many other networks may well already be receiving enquiries from Financial members looking to GTH out before the brown stuff hits the fan big time.

  5. Martin,

    The best scenario is not that Financial hangs on long enough to pay claims. The best, and most likely case, is that Financial remains a strong network for some 350+ ARs for the foreseeable future.

    A rather selfish comment and unworthy of you I think, in effect saying I don’t care one jot if 350 firms lose their licence to trade as long as it doesn’t cost me anything. Lets hope Informed Choice doesn’t come a cropper in the future, but I’d hope to take a more charitable view if it did and support rather than denigrate.

    FYI these have all been largely provisioned for already, I believe this years accounts will show a very significant REDUCTION in provisions compared to last & a significant increase in cash. The FCA notice is the end result of a long process, not the start.

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