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FSA bans and fines IFAs £28,000 for Ucis failings

The FSA has fined and banned the two partners of investment firm Clark Rees LLP for failing to ensure the firm made suitable recommendations to its customers regarding unregulated collective investment schemes.

Paul Clark was fined £10,500 and Ceri Rees was fined £17,500. They have been banned from performing senior roles and also from selling Ucis to customers for two years.

The FSA says both partners failed to make themselves aware of the statutory requirement on the promotion of Ucis to retail customers.

Ucis cannot be promoted to retail investors unless they meet specific exemptions, for example if the customer can be shown to be a sophisticated or high net worth investor. The FSA says neither partner was aware of these restrictions and as a result, promoted and recommended Ucis to ordinary retail investors.

In one case a customer who was near to retirement invested 60 per cent of his portfolio in a Ucis and another retired customer invested 55 per cent of his retirement lump sump in a Ucis.

In total, the FSA identified 11 customers of Clark Rees who were advised to invest in one or more Ucis. One of the Ucis they were advising their customers to invest in had been set up by the partners, Clark and Rees, who had failed to adequately disclose and manage their conflict of interest.

The FSA says Clark and Rees did not make themselves aware of the FSA’s capital requirements and had wrongly relied on their own personal assets to meet these requirements.

Both Clark and Rees agreed to settle at an early stage of the investigation and qualified for a 30 per cent discount. Without the reduction, the fines would have been £15,000 for Clark and £25,000 for Rees.

FSA director of smaller firms and contact division Linda Woodall says: “By their nature, Ucis can be very risky products.

“Within the industry there is a lack of consideration as to which customers this product is suitable for. A review we conducted identified serious concerns in the quality of advice given in promoting and recommending a Ucis as an investment.

“The onus is on the firms to make sure they understand the specific requirements associated with Ucis and so we will remain vigilant in taking action against firms who fail to recommend Ucis to the right investors, making them review their Ucis sales and taking enforcement action in the more serious cases.”


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. Bet they wish they worked for Barclays.

  2. They should have got a job at Barclays. The firm would have been fined, not them. They wouldn’t have faced any personal responsibility and they could have gone back to their jobs the next day.

  3. Are the FSA going to ban their friends at Barclays. Not a chance! They say that the fish stinks from the head. All you have to do is look at Lord Turner and Hector Sants to know that is true!

  4. The double standards of the FSA against IFA’s are criminal and beyond defense.

  5. The street bullies strike again. More money albeit small beer for the bonus and Xmas fund. I am sure Ceri and Paul did not mean to do anybody any harm. Did any of their clients lose any money? Hopefully, Paul and Ceri can obtain employment outwith this industry which befits their talents.

  6. where are the eqivalent sanctions for Barclays senior management

  7. There are to be no sanctions against individuals at Barclays.

    No surprise there then.

  8. Did any clients lose any money? FSA would have stated if they had. If not then why such a big fine?! This firm are being made an example of as the FSA don’t like these type of investments. Did any of the clients actually complain or was this picked up at a review? If the clients are happy then the punishment does not fit the crime.

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