During a treating customers fairly visit last year, the regulator found Cheshire had failed to gather or record adequate information about customers’ personal and financial circumstances to support its assessment of suitability.
It also found the firm had failed to adequately explain the reasons for recommendations, include adequate risk warnings in suitability reports about the recommended product and undertake sufficient research.
Director for small firms Lesley Titcomb says: “This is the first enforcement case arising from our small firm assessment programme on the fair treatment of customers.”
Titcomb warns that the public censure puts advisory firms on clear notice that they must have the right arrangements in place to ensure suitable advice is given and recorded for investment products such as income drawdown.
She adds: “We will continue to identify firms who fail to treat their customers fairly through our small firms assessment programme and other work and we will take action where necessary. This can and will include enforcement action and sanctions where appropriate.”
The FSA has required Cheshire to write to all its income drawdown customers, undertake a past business review and use an external compliance specialist to provide ongoing advice and oversight.