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FSA bans two Ucis advisers

FSA Front 480

The FSA has prohibited two directors of MNFA for their involvement in the marketing and promotion of an unregulated collective investment scheme called the “environmentally beneficial plant scheme”.

Money Marketing revealed this week that Richard Rhys, one of the directors banned by the FSA, is now working at a claims management company that handles Ucis misselling claims.

A total of 73 MNFA clients, mainly high net worth individuals working in financial services, invested around £11.6m in the scheme, which invested in machinery used to process waste into energy. Each investor was charged £1,500 for the transaction, and MNFA was paid around £760,000 in fees and commission for recommending the scheme.

MNFA compliance officer Anthony Adams has been banned from performing any significant influence function other than as or through an appointed representative.

Rhys marketed and promoted the scheme without conducting the proper due diligence. As a result, Rhys did not believe that the scheme was Ucis and so did not comply with Ucis promotion rules. The FSA says the scheme was not described by the provider as a Ucis.

The FSA says Adams failed to understand the rules around Ucis, while Rhys incompetently made misleading statements to investors and failed to take any steps to ensure the suitability of advice to customers.

FSA head of retail enforcement Bill Sillett says: “The risk of consumer detriment arising from the sale of Ucis has been well documented by the FSA over the last few years. Other advisers that sell, or are considering selling, Ucis may consider it advisable to re-read that information and the details of this case to ensure they are compliant with the relevant rules.

“This particular case emphasises the need for authorised firms and approved persons to ensure they carry out appropriate due diligence on an investment scheme which, although not described as a Ucis in the promotional material, may in fact be one.”

MNFA Limited was liquidated in August 2011.

In a statement Rhys says: “Many of the FSA’s conclusions are based on a finding that I relied too heavily on the advice given to me by Scotts Atlantic, an organisation that not only has many years experience of structuring these types of schemes, but that had also taken legal advice from both internal and external lawyers. 

“Since first obtaining FSA approval over a decade ago my record has been unblemished. I have always acted with utmost honesty and integrity and the FSA has not made any findings to the contrary. I have not been fined and have cooperated fully with the FSA’s investigation at all times.”

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  1. On 27 July 2012 the FSA prohibited Mr Rhys from performing any function in relation to any regulated activity carried on by any authorised person, exempt person, or exempt professional firm on the grounds that he is not a fit and proper person in that he lacks competence and capability. Mr Rhys was a director of MNFA Limited, on behalf of which he marketed and promoted an unregulated collective investment scheme (“UCIS”), without conducting the proper due diligence expected of IFAs. This led him to conclude, wrongly, that the scheme was not a UCIS, which in turn resulted in a failure to comply with the statutory and regulatory standards applicable to the promotion of a UCIS. Mr Rhys incompetently made misleading statements to investors and failed to take any steps to ensure the suitability of advice to customers

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