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Firms fined £45k in crackdown on Teps

The FSA has fined two adviser firms a total of £45,500 for failures over advice on geared traded endowment policies, the first punishments handed out as part of the regulator’s review of Teps.

Knowlden Titlow Financial Services was fined £35,000 for failing to ensure that all its advisers fully understood the policies and the risks before recommending them to customers.

The FSA said the firm’s suitability letters did not warn clients about the lack of a cooling-off period and that clients ran the risk of incurring costs of several hundred pounds if they changed their mind and decided not to proceed with the investment.

Derrick Hales Financial Planning was fined £10,500 for advice failings and an inadequate review of sales. The FSA also withdrew approval of Derrick Hales and Kathleen Hales as compli- ance officer and partner respectively.

DHFP’s fact-finds were deemed to be insufficient, with relevant sections left blank, including details of income, expenditure, attitude to risk and investment objectives.

When Mr Hales was questioned by the FSA about a specific incident where custo-mers had expressed concerns about their investment, he said he did not consider this to be a formal complaint. He also stated that he did not “get involved in the client files” and had not done so since the 1970s.

Both firms will stop selling geared traded endowment policies and will contact all customers sold potentially unsuitable poli-cies, offering redress where appropriate.

These two cases are the first to arise from a targeted programme undertaken by the FSA into the advice and sales processes of firms in the geared traded endowment policy market.

Head of retail enforcement Jonathan Phelan says: “The regulator will be taking fur- ther appropriate action to deal with the examples of bad practice that we uncovered in other firms.”


Put it on the state

We are entering a world of unprecedented Government influence and power over banks. HSBC and Santander can probably do it on their own, Barclays say they can as well but RBS, Lloyds and HBOS are taking the support. Let’s hope it brings about the much needed change in levels of confidence to markets and to banking although a lot depends on news from elsewhere.

The third way

A recent Axa survey showed that when filling in insurance forms, 25 per cent of men lied about the amount they drink, with 10 per cent of women claiming to weigh less than they do. Who would have thought it?

Time to change GAR for a sportier model

Is it ever worth giving up a good guaranteed annuity rate? At Pearl Group, we think it sometimes can be, if the compensatory enhancements to other aspects of the policy are sufficiently attractive. But are our customers of a like mind? To find out, we are writing to around 50,000 customers to find out if there is enough appetite for us to develop a formal exchange scheme.


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