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.”