The Financial Conduct Authority has banned and censured Sipp operater Montpelier Pension Administration Services managing director Kevin Wells for exposing customers to a significant level of risk.
It is the firm time the regulator has banned a member a Sipp operator’s senior management.
Wells has been banned from holding a senior role at any regulated firm. He would have been fined £58,500 but was able to show the penalty would cause serious financial hardship.
The regulator has already fined former Montpelier finance director Graeham Sampson £17,850 over failures to ensure the Sipp provider was meeting capital requirements.
Sampson resigned from his role as Tenet Group finance director in September and was fined by the FSA in October.
In its investigation of Wells, the FCA found he did not have adequate understanding of the Sipp market, and did not understand his own and Montpelier’s regulatory responsibilities.
Wells rapidly expanded the Montpelier business away from standard investments, but failed to identify the risks involved. A high proportion of non-standard investments were allowed in Montpelier Sipps, without the necessary controls or adequate capital.
The FCA found Montpelier put client money at risk by breaching rules around client assets; failed to vet and monitor the advisers and fund managers Montpelier dealt with; and lacked adequate knowledge of the assets it administered for clients.
FCA director of enforcement and financial crime Tracey McDermott says: “Last October, as the FSA, we published the findings of a thematic review on Sipp operators and outlined some of our key concerns in this sector.
“This case is a graphic illustration of the reasons for these concerns. Wells’ tenure as managing director should be seen as a ‘how-not-to’ guide of running a Sipp operator – he was out of his depth.”
Montpelier sold its book of business to Curtis Banks in May 2011, and voluntarily cancelled its authorisation in October 2011.