The FSA says the firm failed to ensure its sales were suitable and has ordered Park Row’s parent company Royal Liver to pay customer redress estimated at between £5m and £7.8m.
It has also fined Peter Sprung (pictured), the firm’s former chief executive, £49,000 and has withdrawn his approval to perform a controlled function at Park Row. He has also undertaken not to perform a significant function at any firm for five years.
Money Marketing first revealed news of the FSA investigation in March 2009. Between January 2007 and January 2009, the FSA says a number of serious failings by Park Row were identified in relation to the suitability of its customer advice. It says it failed to ensure that advisers properly evidenced the suitability of sales, failed to ensure advisers offered suitable advice to customers and did not ensure that its systems and controls were adequate.
The FSA says the firm “consistently” failed to take action to rectify the problems despite the fact that concerns were highlighted to the firm on a number of occasions.
Sprung, who was chief executive of Park Row between January 2007 and January 2009, has been fined for “falling short of what was expected of a senior manager of an authorised firm”. The FSA says he failed to take steps to ensure that the firm and its advisers properly evidenced suitable sales, in particular in relation to pension advice.
The regulator says Park Row advisers sometimes provided advice in relation to certain products on which they were not authorised to advise and it was identified that there was a danger that some of them may have selected products based on the fact that they would receive higher commission.
FSA director of enforcement Margaret Cole says the FSA has secured funding estimated at between £5m and £7.8m to ensure that where customers were not given suitable advice, or where Park Row can not demonstrate suitable advice, they will receive redress with support of the firm’s parent company, Royal Liver Assurance Limited.
She says: “As chief executive, Sprung was responsible for ensuring that there were appropriate systems and controls at the firm and that it treated its customers fairly. He failed to do this despite being given the opportunity to do so on a number of occasions. As a result, he has been fined and can no longer work in a significant influence function for five years.”
The FSA says the firm’s breaches were severe enough to impose a financial penalty of £2.4m, were it not for the fact that the firm can not pay such a fine and is currently undertaking an orderly wind-down of its business.
Sprung also co-operated fully with the FSA and settled at an early stage of the FSA’s investigation and therefore qualified for a 30 per cent discount. Without the discount, the fine would have been £70,000.