Tenon will also have to buy back any products from customers who who received unsuitable advice and reimburse them for the amount originally invested plus interest.
This is the first enforcement action resulting from the FSA’s review of the marketing and distribution of structured products concluded in October 2009.
The FSA found that, in relation to its sales of Lehman-backed structured products between November 2007 and August 2008, Tenon failed to treat some of its customers fairly.
The FSA found Tenon failed to fully assess the risks of structured products and ensure advisers considered those risks when providing advice to customers, failed to provide suitable advice to its customers and/or failed to demonstrate the suitability of its advice by recording insufficient personal and financial information on customers’ files and failed to implement and maintain appropriate compliance monitoring to control the use of non-compliant direct offer financial promotions.
In addition, in relation to Tenon’s structured products and pension switching business more generally, the FSA found that the firm failed to have effective risk management systems in place to manage and control its affairs – and ultimately failed to prevent or minimise the risk of unsuitable sales.
Tenon will have to conduct a past business review of structured product and pension switching business, paying customer redress where necessary.
It will also have to have its current investment sales processes reviewed by a skilled person.
Tenon would have been hit with a £1m fine, but qualified for a 30 per cent discount by co-operating with the regulator.
FSA director of enforcement and financial crime Margaret Cole says: “We take failure in this area very seriously and the fine and other actions announced today demonstrate our commitment to credible deterrence.
“This is the first action we have taken for advice failings relating to Lehman-backed structured products following our recent review, and we acted swiftly and decisively in order to return money to investors as quickly as possible. We will continue to take tough action where we find evidence that firms are giving unsuitable advice to investors.”