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FCA legal bill exceeds £140,000 for Charlie Palmer ban

The FCA’s internal legal staff spent 930.75 hours working on the case

charlie palmer
Former Financial Limited chief executive Charlie Palmer

The Financial Conduct Authority spent £143,568 in legal fees pursuing its case to ban former network chief executive Charlie Palmer.

Following a Freedom of Information request by Money Marketing the regulator revealed that its internal legal staff had spent 930.75 hours working on the case.

The FCA also engaged the use of counsel barristers Javan Herberg and Simon Pritchard, which accounted for the legal fees of almost £150,000.

Palmer, the former chief executive of Financial Limited, had appealed the FCA’s decision to ban him and impose a fine of £86,691. This followed the FCA’s ruling that Financial Limited had allowed advisers had given potentially unsuitable advice to 40,000 customers.

The appeal was heard in the FCA’s Upper Tribunal, but was rejected in August.

Banned network boss: ‘There was no malice involved’

The FCA confirmed that internal legal staff costs were effectively zero. A spokesman for the regulator said: “Internal lawyers do not incur costs or bill the FCA for time spent on a case.”

At the centre of this ruling was the FCA’s concerns about Financial Limited’s light touch to compliance and the sale of high risk products, like unregulated collective investment schemes. The FCA drew attention to marketing materials that offered advisers “maximum assistance minimal interference.”

Palmer had previous been fined £49,000 by the then regulator after concerns were raised about unsuitable pension switching advice.

Palmer had previous told Money Marketing that he disagreed with the regulator’s findings. He said the company was prepared to accept an “error rate” of around 2 per cent of the products advised on being mis-sold.

Following the initial FCA investigation, Financial Limited was acquired by Tavistock, in 2015. In the past two months it has emerged that the company is looking to sell this advice business for around £1.5m. Tavistock as 120 firms and 150 advisers on its books. However, it is not known whether concerns about legacy liabilities may deter potential buyers.

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. “This followed the FCA’s ruling that Financial Limited had allowed advisers had given potentially unsuitable advice to 40,000 customers.”

    I do not know the detail of this case but I would appeal too if I was accused of be responsible for ‘potentially unsuitable advice’. Does anyone know whether ACTUAL unsuitable advice was given; above and beyond what you would expect with a large advice business?

    Sadly, where a lot of advisers are involved you would expect a few problems and Financials estimate of 2% was probably realistic.

    I am really concerned that Charlie Palmers outspoken and constant criticism of the regulator may have a bearing on his ban and if this were to be the case then this would be both a sad and rather frightening outcome for a regulator that appears totally unaccountable (see story about Nicky Morgan MP chair of TSC being refused access to the FCA’s RBS report).

    • I think it’s more a case of his constant and blatant rule breaches, boasting about non-compliance and his general unprofessional attitude that brought this on him.

      • Nicholas Pleasure 15th September 2017 at 3:25 pm

        Fair enough, but was the advice given by Financial actually any worse than that given by any other network of a similar size?

        He challenged the regulator and called them names. It seems that maybe he was an easy and political target whilst little effort seems to be expended catching the real crooks who are costing us a fortune at the FSCS.

  2. catch up guys its been sold to sanlam

  3. So lets get this right £150,000 plus 930.7 hours of full Pensioned /Employers NI/able Staff wages, this equates to 26.59 working weeks!!! What we need to know is the real cost, not the obfuscation above, By refusing to offer Regulation to this individual, would have cost One member of staff pressing a Keyboard for two seconds. Who on earth sanctioned this cost, they should themselves be brought to sanction.

    • They had little choice but to incur those costs, Robert, due to Palmer’s decision to take the case to tribunal.

      He very publicly announced, whilst trying to grow his business, that advisers should join Financial Ltd in order to avoid having to comply with regulations. He boasted about ‘light touch’ (which meant virtually no) compliance requirements within the business.

      What should happen, is Palmer should be meeting the costs of the FCA staff and the legal bill, rather than this being passed onto more responsible advice firms.

      • Nicholas Pleasure 15th September 2017 at 3:31 pm

        They did have a choice and that was to accept the appeal.

        I just haven’t read anything that says that customers were actually disadvantaged. If the advice given by Financial was OK then even if the supervison process at the firm wasn’t very good the punishment seems harsh.

        If you can find me evidence of significant problems in the advice given to clients (above that given at other similarly sized businesses) then I would totally accept the fine and ban were fair.

        Otherwise it looks like a witch hunt against someone who dared to stand up to the regulator and that is very scarey in what is supposed to be a democracy.

        Maybe MM could post links to stories about poor advice from Financial.

  4. Charlie Palmer should be footing this bill personally, rather than it being passed onto the industry in increased fees and levies.

  5. He didn’t listen to any of us who were telling him for years to be quiet about his bizarre view of how networks operate

  6. See http://citywire.co.uk/new-model-adviser/news/ex-network-chief-loses-fca-ban-battle/a1040728.

    He should have done what he was told back in 2010 instead of behaving like some sort of swashbuckling maverick (as somebody else neatly put it), ignoring the FCA and continuing to post in the public domain disparaging comments about it [the FCA]. Having brought all this on himself, it’s hard to see any grounds for sympathy.

  7. Living the Dream Dream ..... 15th September 2017 at 8:58 pm

    Outrageous waste of fee payers money. Lack of supervision doesn’t equate to such a heavy fine in the first instant and certainly not when challenged!

  8. The regulator showing its teeth and taking action in this way is to be welcomed and applauded. It has no reason to ‘witch hunt’ per the comments.

    It would be interesting for MM to do a similar FOI request and piece on the costs incurrred re Keydata, Ford, Owen etc.

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