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FCA fines advice firm for lying to regulator

FCA building FCA feesFirm 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.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. “Their misconduct demonstrates a serious lack of integrity.”

    A terrible tale. But what is the point of a fine to a bankrupt?

  2. So, where are the jail terms?
    They lied to the courts, the regulator, why have they not been arrested?
    There is no real deterrent in the UK anymore, until there are serous consequences to individuals actions this will only get worse.
    I wonder, can they actually pay the £50,000 fine?
    Money Marketing, that is the question, its all well and good, a great headline, but can they actually pay it. I suspect they cannot, having most likely already hidden their funds.
    All these reports do is give the honest advisers the hump.

  3. Proof that crime pays. As Derek has said – what is the change of this fine actually being paid? Gesture Regulation. About time they got some new dentures so that they can really bite.

  4. This is in fact the tail end of the story. The firm was forced to stop trading in 2011, when the FSA said they were going to impose a £100,000 fine on them for massively mis-selling geared traded endowments. At the time, a number of high profile IFAs supported Westwood, and said the FSA were unfairly targeting them! Fortunately in 2011 John Chiesa was made bankrupt (sequestrated) in the Scottish courts.

  5. “Their misconduct demonstrates a serious lack of integrity.” Coming from the FCA, that’s a bit rich, is it not?

    That aside, as others have pointed out, what’s the point of imposing a fine that’s highly unlikely ever to be paid? And who, over a period of more than 3 years, allowed them to get away with spending £12,000 a month whilst paying a paltry £200 p.m. towards their debts? What was their Trustee in Bankruptcy doing?

  6. I wonder how many times Westwood IFA has been looked at previously, assessing the suitability of advice.

    If they have lied to the regulators and fraudulently hidden money, surely a prison sentence would be appropriate. I would further suggest that parole should only be considered once they’ve surrendered their ‘proceeds of crime’.

    Perhaps, if he’s still reading the financial press, he take the time to comment himself.

  7. On the other hand, the FSA had no qualms about stating ~ in writing ~ to my MP at the time that it operates in accordance with the Statutory Code of Practice for Regulators. That’s a lie, isn’t it?

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