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FSA fines and bans directors for mismanaging investment scheme

The FSA has banned and fined the directors of a Yorkshire-based adviser firm for running an investment scheme which put 53 customers at risk of losing nearly £10m.

In a statement released today, the FSA says Neil Marlow, and his son Timothy, of the Bridford Group from Skipton in North Yorkshire, were approached by ‘businessmen’ with an investment scheme that they chose to promote to clients and other IFAs. The FSA says the Marlows did not properly consider whether the scheme could work or investigate whom they were dealing with.

The scheme promised a guaranteed return of at least 6 per cent, but to deliever that the FSA says the Marlows made a series of unauthorised transfers of investors’ funds in an attempt to generate the returns on the investment that customers had been promised.

The regulator has fined Neil Marlow £38,383 and fined Timothy Marlow £31,838. Both have been banned from holding any significant management influence functions.

It has also fined City Gate, a Glasgow-based group, £42,000 for approving promotions for the scheme to its ARs. The FSA says the group’s systems and controls for reviewing financial promotions were “simplistic, informal and applied inconsistently”. It told the FSA that it trusted Neil Marlow and saw no reason to question the scheme.

As a result of promoting the scheme 53 customers, including one of City Gate’s customers, invested £9,452,000 which the FSA says was put at a serious risk of loss.

FSA director of enforcement Margaret Cole says: “The Marlows did not properly consider who they were dealing with and the feasibility of the investment scheme presented to them. The financial promotions they generated and submitted to City Gate were seriously deficient, which had the effect of misleading customers about the risks involved in investing in the scheme.”

Cole also criticised City Gate’s failings: “Firms which have AR networks have important responsibilities in monitoring them, including approving any financial promotions they issue. If they do not carry out these responsibilities properly they are failing the regulatory system and the IFAs and consumers who rely on them.”


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There is one comment at the moment, we would love to hear your opinion too.

  1. Julian Stevens 21st July 2009 at 1:49 pm

    FSA fines and bans directors for mismanaging investment scheme
    It would be interesting to know how much time elapsed between when the scheme first came to the attention of the FSA and when the FSA initiated action to investigate and ultimately put a stop to it. If the FSA acted quickly and decisively, then it is naturally to be praised. The thing is, though, the department over which Margaret Cole presides seems to have something of a track record of not doing anything at all until the misdemeanour in question has already been going on for about three years, so it would be interesting to know what the FSA’s action timescale was for this particular case.

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