The FSA has publicly censured an IFA firm and banned two advisers after they failed to demonstrate the suitability of their advice.
Birmingham-based IFA firm Wheatcroft Fox & Company has been censured for systems and controls failings, an inability to demonstrate the suitability of advice and for failing to co-operate with the FSA.
Partner at the firm Peter Fox has also been banned from carrying out any significant influence functions.
The failings at Wheatcroft Fox emerged during an FSA visit in November 2008 as part of the regulator’s Treating Customers Fairly programme.
Following the visit Wheatcroft Fox was referred to enforcement, after the FSA identified problems with the firm’s sales and advice processes.
The FSA also found a failure to record sufficient information about customers’ personal and financial circumstances, and a failure to ensure that its systems and controls were adequate to monitor the suitability of its advice.
The FSA says although customers’ circumstances were not evidenced on the customer files, Wheatcroft Fox was able to demonstrate knowledge of its customers’ personal and financial situation.
But the regulator says the failings are serious as a number of them relate to pension products, which the FSA has previously highlighted as being high risk.
Wheatcroft Fox also failed to make substantial changes after the firm’s external compliance consultant first identified failings in 2006.
In a separate case, the FSA has also publicly censured and banned West Midlands-based IFA Gary Hexley for giving customers unsuitable investment advice.
Hexley’s ban related to investments set up through his own property development company, Greenfield International in 2003, and investment advice he gave at Exclusive Asset Management between January 2009 and May 2010.
Both companies are now in liquidation.
Hexley’s misconduct came to light in April 2010 during an FSA visit to Exclusive, prompted by complaints from clients and other IFAs.
The FSA found that Hexley had told investors they would be shareholders in Greenfield in return for their investments, which was not the case.
Hexley failed to disclose accurately to investors when they would receive repayment of their investments. He also failed to demonstrate the suitability of advice he gave at Exclusive, to explain the reasons for his recommendations, and relied on a small range of investments which paid higher commission.
He also advised one of Exclusive’s clients to transfer their pension without the appropriate qualifications to do so.
FSA head of retail enforcement Tom Spender said: “It is unacceptable for a firm operating in this industry not to comply with the FSA’s principles and rules and to refuse to comply with a requirement notice imposed upon it. Peter Fox failed to control his business effectively and exposed the firm’s customers to the risk of receiving unsuitable advice.
“Hexley’s conduct fell well below the standard expected by the FSA. The FSA will take robust action against individuals who fail to demonstrate competence and capability.”