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FCA bans and fines director £166k over poor Sipp advice

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A former director of an advice firm which recommended clients invest £112m in unregulated Sipp investments has been fined £165,900 and banned from senior roles in financial services.

The FCA says former TailorMade Independent director Robert Shaw failed to check the suitability of Sipp investments and also failed to manage conflicts of interests.

TailorMade was a distributor for overseas property firm Harlequin, which is being investigated by the Serious Fraud Office.

Between 2010 and 2013 TailorMade advised 1,661 customers to invest £112.4m in unregulated investments such as green oil, biofuels, farmland via Sipps.

The FCA found that Shaw benefitted financially from being the director and shareholder of TailorMade Alternative Investments, an unregulated introducer which referred clients to Tailor Made Independent.

Shaw received payments for introducing clients to TailorMade Independent but failed to disclose this to investors, despite being warned by compliance consultants to do so.

FCA acting director of enforcement and market oversight Georgina Philippou says: “Robert Shaw exposed customers to risky investments without considering if these products would meet their needs.

“He personally benefitted from sales of these products without revealing to customers the full extent of the benefits he received. His actions mean many customers faced losing all of their hard earned pension funds. This is not the conduct we expect of senior individuals.”

TailorMade is now in liquidation and the Financial Services Compensation Scheme is investigating claims brought by TailorMade Independent clients.

Former TailorMade Independent directors Lloyd Pope and Peter Legerton were fined by the FCA in March, with Pope also fined £93,800.

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Comments

There are 17 comments at the moment, we would love to hear your opinion too.

  1. Question !
    Will this (fine) money got back to the FSCS to compensate the people ?
    Or will it go to George, only to absorbed & laundered into the treasury coffers ?

  2. If the commissions were just 1% then the earnings would be over £1 Million.They were more likely to be 10 times plus….Surely any fine should be at least equal toThe commission earned or there is no deterrent..

  3. This fine is totally disproportionate to the amount of losses made by TailorMade and also the cost to the rest of the industry in an increase in our FSCS levy and the cost to the industry. it makes a mockery of the fines system.

  4. Barred from a senior role eh. He must be devastated. No messing around with these FCA boys

  5. How is the fine linked to level of fees/commission made on this?

  6. The greed of some people still astounds me. Greed of the adviser and greed and stupidity of the clients. The client’s couldn’t be that daft as the average investment is over £67k. Do people just swallow anything they are told, or is the lure of huge (imaginary) returns too much to resist?

    Fine be damned. There should be a proper investigation. If it was just incompetence then the fine should – as others have said be more in proportion to what is undoubtedly the huge profits made. On the other hand if this was collusion with what appears to be a bent organisation (why was Mr Shaw so sanguine about dealing with what was evidently a dodgy firm?) then he should fall within the scope of the SFO investigation and if found guilty a decent helping of porridge would be appropriate.

  7. Ahh – thank goodness for the FSCS. They’ll sort out this mess rather generously I’m sure. Interesting that Robert Shaw is a director of four active firms and was a director of 5 now non-active firms. Maybe that should have raised alarm bells with the regulator ‘before’ the problems arose. If my understanding of the typical modus operandi for advisers using the types of investment quoted is correct, there would have been ‘commissions’ of 5%+ on £112.4m in just 3 years. Back of a fag packet calculation – £5.6m. Not bad. Obviously it should be for the rest of us to pay for these misdemeanours. Oh and shouldn’t the regulator have been slightly concerned by the Gabriel returns? I’m sure I must be the only Financial Adviser who worries about this, but as my finger hovers, mildly shaking, above the send button on the Gabriel screen after the obligatory warning comes up that its a criminal offence to knowingly provide false information, I wonder will my 36 year career be ended by some innocent error based on a misunderstanding or calculation mistake – meanwhile the Robert Shaw’s of this world can fill their boots with appalling advice (sales) and its no problem really because the likes of you and me will pay for it. What a totally brilliant system we are part of. It’s no good, I’m going to have to take a second tablet now.

  8. Isn’t it time that the FSCS should be disbanded as it is no longer fit for purpose.

    Like PPI people are being rewarded for acting like dumb deluded dupes when their own greed leads to losses on investments.

    • Possibly a bit harsh Sean – advisers work hard to build up the trust of clients, I am sure your clients trust you implicitly and would follow your advice – this guy was clearly good at leading the clients on. Often I read in comments Advisers stating that they are fully trusted by their clients and a client would follow their recommendation – I am not for a second saying you would Sean, but if in a world where you were to turn rogue how many of your clients would still follow your recommendation – not all, but I am quite sure that as you would have built a level of trust with your clients some would believe in the returns you promote to them.

  9. Spot on John Reilly, until people are punished appropriately ( relieved of all personal assets and sent to prison ) they will continue to push the boundaries.
    Always stable door with the useless regulator and neutered side kick the FSCS.

  10. What’s the betting that he is already trading again under the umbrella of another organisation.

  11. Whilst one can accuse the clients of being stupid, we all know that most people accept the advice due to trusting an individual who is authorised and regulated. Based on the information provided, the lenient sentencing Shaw has received is absolutely incredible. It bears no comparison whatever to the desperation and suffering which hundreds of his clients will have endured with many probably losing the majority of their pension savings. In cases like this, those who have lost everything even commit suicide. The report doesn’t confirm if the compliance consultants reported him to the authorities – perhaps some of the clients would have been spared had they done so? Shaw should be made to meet and apologise personally to all of his victims who face hardship due to his activities. Had Shaw stolen from the Government, he would be facing a lengthy and well deserved jail term and having to pay back his ill gotten gains as well as any others involved in the scam.

  12. I received my F-pack invoice yesterday and as it gives an option to dispute the fees, whilst I didn’t feel disputing a 10 MAS levy was worth an argument I have posted a dispute as I dispute any agreement to pay for advice on SELF INVESTED pension failures when they hold UNREGULATED investments. The FSCS should not be paying out as we have no recourse to the firms who are pushing this dross and the directors have ended up with Millions at our costs and a paltry fine.
    I will pay my FCA fees, but I will not pay FSCS fees this year without a fight as the Treasury are robbing the fines (in support of illegal wars and the casualties they cause i.e. Iraq and still no Chilcott Report) when they should be covering the costs of these. If the FCA are now debt collectors on behalf of both the FSCS and Treasury and my authorisation and right to advise should have NOTHING to do with the FSCS or the Treasury, these should be separate issues.

  13. Phil an interesting idea I must check the paperwork as I did not see the comment on disputing the bill. I suspect our bills are similar being small firms and the extra cost means I will not be employing any help in my business this year, even though I could do with the help at this time.

    Based on 1661 cases into SIPP’s, there must be a common SIPP provider on this case and why are they not being held accountable, as surely they should have questionned the volume of business coming from one firm.

    If not then they must be held accountable as well.

  14. Gordon Sinclair 15th August 2015 at 4:04 pm

    @ Simon Honey

    I agree that there must be a common provider. They may have reviewed the investment to check for HMRC acceptability (no tax charges) and to ensure it existed.

    Suitability is down to client and adviser.

    That said common sense would say to do a bit of digging when so much business came through the door. But in the battle of sales vs compliance I found that sales usually won.

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