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FCA fines and bans ex-Financial Group compliance director

The FCA has banned and fined former Financial Group compliance director Stephen Bell £33,800 for “systemic weaknesses” in the firm’s systems and controls. 

It comes after the regulator censured networks Financial Ltd and Investments Ltd, two subsidiaries of the group, in July.

Between 20 August 2008 and 16 January 2013, Bell was responsible for compliance systems and controls at the firms.

The FCA found that Bell designed and implemented the firms’ systems and controls and was therefore knowingly concerned in the networks’ rule breaches.

The regulator banned the networks from recruiting new ARs and individual advisers for four and a half months. It found the firms failed to ensure their advisers were adequately supervised and controlled to minimise the risk of misselling and the provision of unsuitable advice to consumers.

FCA acting director of enforcement and market oversight Georgina Philippou says: “This action shows that a compliance director of a network has an important role in terms of ensuring that systems and controls across the network are focussed on minimising the risk of misselling and the provision of unsuitable advice to consumers.

“We view Bell’s failings as particularly serious because he had been put on notice of the need for significant improvements in the firms’ systems and controls and compliance. The network model is undermined if the senior managers of the principle firm do not carry out their responsibilities. “

Bell agreed to settle at an early stage of the investigation and therefore qualified for a 30 per cent discount. Without the discount the FCA would have fined him £48,389.

In 2010 Financial Ltd director Charles Palmer was fined £49,000 for management failings which resulted in poor compliance monitoring on pension switching advice.

In June, the network’s accounts revealed it was under investigation by the FCA over pension transfers.

At its peak, the network was responsible for 400 ARs and 500 individual advisers, who gave advice to over 60,000 customers, including in relation to unregulated collective investment schemes, pension switching and occupational pension transfers.

The group was referred to the FCA’s enforcement division following a risk assessment in May 2012 and the FSA’s thematic review of Ucis sales.

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. Well for balance, I worked with Steve for many years as an AR at Financial and found him to be extremely helpful and accommodating in helping the members to navigate the FCAs rules.

    When I decided to leave the firm, even though it had been announced he was leaving imminently, he couldn’t have been more helpful in ensuring that my departure was handled smoothly, it now seems like his was anything but that.

    Best of luck Steve, at least you’ll never have to deal with the FCA again !

  2. “Bell agreed to settle at an early stage of the investigation and therefore qualified for a 30 per cent discount. Without the discount the FCA would have fined him £48,389”

    This system must surely be wrong? The FCA should not place an individual in a position where he/she is has a disincentive to maintain their innocence of the allegations. This is especially so when the accuser wrote the rule book and is a body of the executive that under constitutional law should not make laws (the role of the legislature) or interpret them (the role of the judiciary). In fact the role of the executive ”should be” to enforce the law as written by the legislature and then for its actions to be adjudicated upon by the judicial system and not by an unaccountable regulator, so unaccountable they are not even accountable to the Treasury Select Committee, accountable elected politicians!

    In short a defendant should not be penalized for PLEADING his case This, seems to me to be a perversion of UK justice and what one might expect when justice is not administered via the judicial sysetem!

  3. Michael Winfield 13th March 2015 at 12:41 pm

    This Guy I feel sorry for, the FCA, were negligent and the true failures, for they allowed too long before taking action.

    So if he cannot now meet the liabilities will the Compensation Scheme, spread the load to registered individuals, Which in itself may be illegal, under the Bill of Rights and or the Human Rights Act/s.

    I therefore suggest hr reads the Bill of Rights and the Human Rights Act. Draconian Penalties are illegal, as is the promise of a penalty.

    Having stated that his crime if their is one emanates from Stupidity tinged with greed

  4. As the penalties keep coming for people who no doubt thought they understood and were complying with the rules, so up and up goes the cost of financial advice and down goes its availability.

    The Guardian carried a story last Saturday about how banks are closing accounts for customers with links to places like Syria or Iran, even if they are totally innocent. The banks are understandably worried about the huge penalties that apply if they get it wrong. Why keep an account open for someone on which you may earn a few hundred pounds if that might cost you several million.

    I firmly believe that we are now in the last days of regulation in its current form. It is strangling the industry and no-one is earning enough to make the potential undefendable liabilities worthwhile. Simon Mansell’s post above is spot on. If the FCA accuse you, you have lost. You cannot ever win. They will destroy you if they have to.

    If I were compliance director at a large network I would be seriously be considering my position. I would at least want a significant pay rise.

  5. I say again… “the way it is interpreted and enforced by the FCA, principle based regulation cannot work”

    How can anyone be held responsible when they couldn’t possibly know that they were breaking the ‘rules’ until well after they had supposedly broken the said ‘rules’? “We are not going to tell you what the ‘rules’ are until after you have broken them” is not being particularly helpful in my book Mr Regulator!!

    I say once more… “the way it is interpreted and enforced by the FCA, principle based regulation cannot work”

  6. “Settle at an early stage of the investigation”, i.e. there have not finished investigating but already decided the man is guilty.
    I don’t know the merits of what was involved, but it seems ludicrous that a network compliance director who it appears from earlier comments was well though of is given a lifetime ban whilst having to pay a bribe (I mean fine) which is used to then pay for the injuries incurred during at least one illegal war (Iraq)where the report on the main instigators continues to be supressed pre election! And to bail out the banks which ran away from about 2003 (wasn’t that when the 2nd Gulf war started), we had “no more boom and bust” and had all our gold reserves sold off!
    Systems and controls at Financial appear to have been much better than higher up the food chain…..

  7. No sign of any Bankers getting their collars felt ( on a personal basis ) or fined or kicked out or banned ? The fines of Banks is paid by the shareholders into the Government coffers . . .as if these “fines ” were similar to . . .Pension Recycling ? I can understand why the FCA offer a Discount for fraudulent practices – deceit and Financial Destruction of Clients portfolios . . . .what I cannot understand is . . . . Why these activities are not dealt with under the Criminal Act of the FCA Regulation ?
    In my opinion these ” so called fines “, are an attempt to deceive – clients into believing the FCA is dealing with issues – Big Headlines . . . .and scare AUTHORISED ADVISERS . . .using their Big Stick approach . . .to cover up what is in reality failing I. E. REGULATION. Regulation has failed . . . continues to fail – yet Cameron continues to fund it. Why ? Is it because so many Big Banks, and Insolvent Insurance companies . . . . sponsor the Conservative party ,. . . .or use their Tory Granddess as Chairman EG LloydsTSB – who continue with their corrupt activities . . .unfettered by Regulation or Regulators. . . .uncontrolled by their employers . . . .and their ” Big Guns “, under their Trade Union the British Bankers Association ( Angela Knight and all that !) . . . .Corrupt – Commercial and continue to trade ! Good old LloydsTSB – for their Journey, their Journey of deceit, and rifling through their client bank . . .no pun intended . . . making their financial use of their current bank of clients – because there is NO COMPETITION . Competition has been destroyed by Cameron . . . .UK Plc is up for sale Sir Malcolm Rifkind and Jack Straw . . . .are using their colleagues and contacts – during their periods of Self Employment . . . . .as agents and dishonest Brokers . . .for these sales.

  8. Michael Winfield 14th March 2015 at 10:35 pm

    In general the answers are from losers.

    In the event you chose to be an IFA, protect yourself with business protection insurance.

    But before even coming on board, go to college, study Constitutional, Treaty, Domestic and Commercial
    Law, in relation to your ambitions. At least give yourself a chance (a degree is not necessary). Go to night school two nights or more a week, be guided by the lectures.

    For even with knowledge you walk a mine field.

  9. 1 Question !

    Who subsidies these discounts ? 30% in this case (are the good again paying for the bad)

    If the answer is no-one (hard to believe) then how do the FCA come up with the figures ? plucked from thin air ?

    As others have said the FCA seem to work on the premise; our ball, our pitch, our goal posts, in fact our rules !

  10. I wonder if those at the top of HSBC etc. will suffer the same consequences?

    Probably not as there are plenty of ex-FSA/FCA staff joining the banks!

  11. If the FCA found advisers inadequately supervised – surely early action under strict controls would be the way forward ? I cannot wait until the FCA investigates Tenet Group – owned by several insurance companies – who permit advisers to operate Two Different Companies under their ONE FCA Authorised Agency – and REFUSE to investigate Fraud – lies and misleading statements on Literature . But like HSBC and other insolvent Banks I expect NO ACTION WILL BE TAKEN ! My question is Why Not ? Bank Directors and Chairmen – are appointed by the Shareholders – who in many cases EG BT is Blackrock ( asa major shareholder ) – who care not a jot for their clients, by continuing to invest in a Monopoly – which treats their customers with CONTEMPT – and APPLIES EXPLOITATION for higher unnecessary Fees and Charges because they CAN I.E. Sir Michael Rake Chairman and James Watters Chairman’s Office Glasgow etc., because as a Monopoly they are protected and permitted to continue Rogue Trading – sending out Mohammed ( BT Open reach Engineer ) TO CUT OFF TELEPHONE LINES . . .disrupt business – and assist sir Michael Rake ( President of the CBI ) to DESTROY BRITIS BUSINESS . . . .similar to the Chinese who Control their communications in the same Monopoly manner . . . . . .Forcing and CHARGING extraordinarily high FEES AND CHARGES – and applying DEBT COLLECTORS – to ENFORCE THEIR CORRUPT PRACTICES – with Full Knowledge of Anne Main MP and Sir Michael Rake and David Cameron . . . .Organised Crime – at the highest levels . . . . . .

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