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FSA fines director for not disclosing adviser’s past

The FSA has fined a director of a Cornish IFA for not disclosing crucial information about one of his advisers to the regulator.

Christopher Davies, director of Cornwall-based Newquay Investment Services, was fined £17,500 for not disclosing to the FSA important information about an adviser Davies had employed at Newquay.

The regulator says by not disclosing certain information it led to a risk of customers being recommended unsuitable mortgages.

After Newquay had applied for the adviser to be confirmed as an approved person last year, Davies became aware that the adviser had been suspended by his previous employer because of concerns about his business methods and ethics, including apparently inflating income figures in mortgage applications. Davies raised these concerns with the adviser and concluded that the adviser had lied to him about why he had left his previous employment. Davies then failed to disclose this information to the FSA.

The FSA says that despite being aware of the adviser’s past, Davies failed to exercise control over mortgage applications he was allowed to submit – in particular the FSA says Davies failed to understand the risks associated with fast-track mortgages and as a result allowed the adviser to submit mortgages of this type to lenders.

FSA director of enforcement Margaret Cole says: “When Davies became aware of the later adverse information relating to the adviser he should have immediately informed the FSA. The fine indicates that the FSA takes a serious view of such failings and serves as a deterrent to directors of regulated firms from acting in a similar way.”

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. Standards
    Does the FSA use similar standards to disclosure for its own staff when they make mistakes?

    Oops! Sorry nobody at the FSA has made any mistakes, it was the ‘systems’ and ‘procedures’ that were not up to the job. Ergo no one was at fault!

    Pot-kettle-black. Get your own house in order first please.

  2. Standards? At the FSA?? – Its life Jim but not as we know it!
    Of course the standards are different – diferent mindset! After all we get fined if we make a mistake whereas the FSA gives the guy who gave northern Rock a clean bill of health just months before they went tits up a £640,000 golden handshake. With the FSA about to be disbanded, can we expect even MORE fines so that those losing their nice FS pensioned jobs can get a similar golden goodbuy?

  3. re:standards
    It was hardly a mistake though was it? The guy intentionally lied and inflated salary figures to boost not only the mortgage advance, but his commission payment. Big difference between that and making a mistake.

  4. FSA fines director for not disclosing adviser’s past
    I am so pleased to see that the FSA is doing a great job of sorting us out, which is right and proper.

    And now to the banks !

  5. The Mystery Shopper for IFAs 25th August 2009 at 12:14 pm

    FSA fines director for not discloing advser’s past
    Small victories for a failed regulator. A court of law would have stripped the director of his assets for any fraudulent activities What a waste of time by the FSA. Sack them all and get them to clean the streets instead.

  6. Am I missing something?
    Not sure I have read this correctly but to me the previous employer that suspended the adviser should surely have reported it to the FSA. That way when he was being re-registered the FSA would already have known about it and could have made the new employer aware. Is this not the point of letting the regulator know in the first place?

    Like most things there are probably other issues here but a £17,500 fine sounds a little severe for failing to report something to the regulator that they should already have known about

  7. More FSA bashing!
    Hell, the guy should have let FSA know there were problems, obviously the key Compliance issue is affordability and this guy could not be trusted in this respect, given his past record.

    Hence a fine. I can’t see why there should then be a cacophony of FSA bashing. What do you want, no regulation at all so you can flog and churn whatever you like, just like the ‘good’ old days?

  8. IFA BAshing
    Perhaps if all IFA’s change their names to RBS or HSBC they could be regualted but in a ‘fine free’ arena as the big banks seem above the FSA in terms of being fined!!

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