Firm spent money on flying lessons and jewelry after hiding assets in bankruptcy
The FCA has fined a husband and wife financial advice team £50,000 and banned them after the pair tried to lie to the regulator during an interview.
Westwood Independent Financial Planners, fronted by John and Colette Chiesa, went bankrupt in 2011 after the FCA took action over the mis-selling of geared traded endowment policies.
Financial Ombudsman Service complaints built up against the Chiesas, who had unlimited liability in the firm.
In late 2011, their assets and liabilities were assessed by a trustee to see what could be paid to creditors, but the Chiesas “made inadequate, incomplete and misleading disclosures” according to an FCA statement today to try and hide potential assets from being paid out.
A continued beneficial interest in an unregulated company which could have paid more than £1m a year into an offshore remuneration trust was one of these.
The FCA says the trust funneled the Chiesa’s more than £84,000 a month between April 2012 and December 2014 through loans, but the regulator says it believes the pair were never going to try and pay these back.
Despite also having an interest in another unregulated company that paid them around £5,000 a month towards living expenses, the Chiesas only paid £200 a month to creditors during the bankruptcy proceedings.
The FCA says: “Between October 2011 and July 2013 Mrs Chiesa spent on average £6,000 per month on clothing, jewellery, interior design, cosmetic dental treatment, travel and her Porsche car. Between August 2011 and December 2014 Mr Chiesa spent on average £12,000 per month on flying lessons, tennis tickets, football tickets and club membership.”
The Financial Services Compensation Scheme, which is funded by the industry, was forced to pay over £3.8m to Westwood’s client over compensation claims.
Executive director of enforcement and market oversight Mark Steward says: “The Chiesas misled their creditors, especially the FSCS, in a calculated way. Their misconduct demonstrates a serious lack of integrity.”