The Financial Conduct Authority has fined Sesame £6m for failing to ensure investment advice was suitable and for failings in the systems and controls that governed the oversight of its appointed representatives.
The fine is made up of £5.8m for systems and controls weaknesses in its investment business and £245,000 for advice in relation to Keydata products.
The regulator found between July 2010 and September 2012, Sesame failed to take reasonable care to organise and control its affairs responsibly and effectively and failed to improve oversight of its appointed representatives.
This meant it failed to monitor sales of funds that were not suitable for clients and that file reviews and supervisor visits were not suitably robust.
The FCA says Sesame’s culture and language used internally “supported an incorrect view that its customers were the ARs rather than the end retail customers”.
These failings were found after Sesame had advised 426 customers to invest a total of over £6.1m in Keydata products between July 2005 and June 2009.
The regulator says the same failings could have been repeated because Sesame did not improve its systems and controls in the aftermath of the Keydata advice.
FCA director of enforcement and financial crime Tracey McDermott says: “Sesame is one of the largest and most well-known financial services networks in the UK, responsible for the oversight of some 1,220 ARs.
“It describes itself as ‘perfectly placed to deliver expert guidance and services’ but the failings in this case fall far short of that. The weaknesses in Sesame’s systems and controls show there was an ongoing risk that unsuitable advice could be given by Sesame’s ARs.”
Sesame will now carry out a voluntary past business review of Keydata product sales and of pensions transfers carried out between July 2010 and September 2012.
Sesame chief executive George Higginson says: “We regret these past issues and, in co-operation with the FCA, we have undertaken an immediate past business review to ensure that any customers who received unsuitable advice on Keydata products have been compensated.
“The executive team and I are fully committed to ensuring our advisers are delivering the right customer outcomes that can be clearly evidenced. This commitment is fully endorsed by the SBG board.”
Sesame qualified for a 30 per cent fine reduction due to early settlement. Without the discount, the fine would have been £8.6m.