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FSA fines IFA firm £49,000

The FSA has levied fines totaling £49,000 on a Derbyshire-based financial advice firm, Sett Valley Insurance Services, and its two partners for failures in its sales and advice processes.

The failings at Sett Valley were initially identified during an FSA visit focused on the fair treatment of customers, as part of its assessment programme for small firms.

The subsequent FSA investigation identified a number of problems with the firm’s sales and advice processes, including a failure to record sufficient information about customers’ personal and financial circumstances to ensure the suitability of any advice they gave, and a failure to communicate with them in a way that was clear, fair and not misleading.

The FSA found both Sett Valley partners Leslie Lugsden and John Hargreaves were responsible for the failings and were each fined £10,500 for breaching the FSA’s rules. Sett Valley was fined £28,000 for the breaches.
  
Sett Valley must appoint an external compliance consultant to conduct a phased past business review of products sold and compensate any customers who may have suffered loss.

FSA director of enforcement and financial crime Margaret Cole says: “It is unacceptable for a firm operating in this industry not to comply with the FSA’s principles and rules. The partners of Sett Valley failed to control their business effectively and exposed their customers to the risk of receiving unsuitable advice.  

“The fine levied on Sett Valley reflects the seriousness of the failings found at the firm while the fines imposed on the partners demonstrate the importance we place on senior management discharging their responsibilities effectively. Had they not agreed to settle this enforcement action at an early stage, the fines would have totaled £70,000.”

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Comments

There are 34 comments at the moment, we would love to hear your opinion too.

  1. Incompetent Regulators Awards Team 27th January 2010 at 12:09 pm

    Ooooooooooohhhhhhhhhhhhh!!!!!!!…………

    I’m so scared of the FSA as they are so efficient!

  2. Philip Meadowcroft 27th January 2010 at 12:16 pm

    Still no news about the failure of the top brass at the FSA to comply with the FSA rules in respect of their expenses…….

    I wonder how the FSA’s Chairman is managing his expenses in Davos this week.

  3. Whilst I am not defending the actions of this company’s procedures, perhaps Margaret Cole should be looking at how THEY comply with THEIR own rules. It would be nice to think that the Senior Managers that overclaimed hotel expenses will be reimbursing them and have disciplinary action taken against them – I doubt very much that this will happen though.
    How am I supposed to control my business effectively when the FSA are still delaying my re-authorisation (without any explanation) following the closure of Park Row on 13th November and not allowing me to advise clients? Perhaps they want to put small IFA’s out of business giving all the power to the banks?

  4. Yet again our industry is let down by idiotic remarks.

  5. So, if the likes of the banks couldn’t produce the mountain of paperwork required to fend off the TCF Harpies would we see a full review of all their sales?

    Is it a fact that one bank has been subjected to an FSA ‘mystery shopping’ exercise? Why is that so?

    Balanced? Don’t think so.

  6. Yet again another small company making headlines, yet the 1 million plus bank complaints filed by consumers have not led to ONE action by the FSA on a well know high street bank.

    People wonder why the FSA gets a bad press and why so many people do not respect them and make nasty remarks, it is no wonder at all to me.

    Surely the highest number of consumer compliants would lead to the highest number of regulatotory involvement?

    Not with this regulator it appears, back to kicking the little man then.

  7. Francis Stephen Adams 27th January 2010 at 1:13 pm

    Once again, a scary article written by a journalist who should spend a day with an IFA. The bully boys have struck again and I hope that they get what is coming to them later on this year. As for Seth, why do they not stick it right up the bully boys and resign their authorisation, I am sure they can earn more money being unauthorised. Best wishes to the boys at Seth for the future.

  8. I’m unable to comment of the specifics of this case but I would like to see some fines being applied by the FSA to their own FSA staff including main board officials who have exceeded their FSA hotel allowances and then breached their own rules by claiming the excess! Several years ago MM reported on an FSA compliance visit to an IFA. The IFA recorded the time and discovered that again the FSA staff had made false expense claims. I’m afraid Margaret Cole you need to put your own Canary Wharf house in order before you do anything else!

    Signed Ann Onymous

  9. Of course with a fine of £49,000 there would have been a judicial type review of the evidence and a right of appeal to the opens courts – NOT! Or do we now live in a police state – YES

  10. Reply to Francis Stephen Adams post:

    Francis I think you will find that you may not resign your authorisation without FSA permission to resign!

    We must also be careful not to defend the indefensible. These IFA’s may have been bandits and I would hope at £49,000 fine they were but I fear they may have just made some silly mistakes!

    The problem is that IFA’s have been “outlawed” and by that I mean they are not subjected to the same rule of law that is the birthright of every UK citizen and that includes terrorist bombers and yes it should even include IFA’s.

  11. Does anyone else find this statement from Margaret Cole rather sinister?

    “Had they not agreed to settle this enforcement action at an early stage, the fines would have totalled £70,000.”

    Don’t you dare try to defend yourself against our verdict as judge and jury.

  12. Blah blah …insert comment re hotel expenses…..

    Blah blah…insert comments re banks…..

    (Yawn)

  13. It’s as though the FSA are trying to get extra bonus/target points before the next General Election. If a New Government is elected (yes-yes-yes; we all hope!). It’s a change of regulation because the FSA was Labours wonderful idea!

    I just hope we get a new change of Government, one that does not waste our money; and with it comes new change of regulator!
    So far I have seen five changes in regulators, having had over 35 years experience in our industry . The ones I remember are; 1. FIMBRA, 2. PIA, 3. GENERAL INSURANCE COUNSEL, 4. THE MORTGAGE CODE, and of course 5. the FSA; and all it’s X-Factor stars? i.e. the ones that like to get their faces put in the financial papers!

    Can any one else remember any more regulators?

  14. I think we’re ALL missing the point here as the FSA ARE doing us all a favour (tic)!!

    Once our industry (IFA) has been completely detroyed and we’re now employed by the banks, then we CAN enjoy the silly bonuses they (the bankers) receive for doing a ‘half-arsed’ job, without feeling bad about it all … AND the FSA will leave us all alone as they will turn a blind eye to customer complaints …

    Quick, where do I sign up??

  15. Another blitzkrieg on a small firm. But what about some sort of action ~ any action at all, come to that ~ on the part of the FSA for all the patently unsuitable advice given by Barclays with regard to the Aviva Global Balanced Managed fund? The only news on that one is that FOS adjudicators are being given “special guidance”. Now there’s a surprise.

  16. All very brave words, how many respondents have been through an enforcement action? No, didn’t think so…

    I have. It’s quite a process and you get plenty of opportunity to defend yourself. It’s not easy for the FSA to impose a fine, they have to put a case together and it has to get past the Regulatory Decisions Committee, the chairman of which is not an FSA employee.

    If you still don’t agree you can refer the case to the Tribunal, a quasi court officiated by qualified legal practitioners and independent of the FSA. People have done this and won but it’s rare.

    So, don’t kid yourselve and wallow in self-righteous indignation, those who are fined generally deserve it…

  17. Commercial Decision?

    Yes I agree Mr Smug, it fails to say that any client has been mislead, mis-sold or made a victim of fraud.
    So faced with the prospect of a £70,000 fine or lower they picked the lower sum – as they probably do not have a million pounds in the kitty to fund a fight.

  18. Referring to Simon Mansell’s comments 1.33pm; Last paragraph
    I think we would be treated better off if we were terrorist bombers, or crooks. Of course, this means if, and only if found guilty; you would be sent to prison where you would have 3 meals a day, and because you would be prisoner, you would not have to pay any income taxes anymore. How does that sound!

  19. Perhaps Fungible Cat should have the bottle not to remain anonymous

  20. FSA are no more than playground bullies. They smash the soft target little guys,but do not have the guts to go after their pals at the banks due to their size and also upsetting them,where they know they will be rewarded with cushy jobs when the fail at the FSA (as many have). Why do the FSA not just come out with it and state they do not want ‘one/two man bands’ and wish to ‘stay in bed’ with the banks.

  21. Picking up on Julian Stevens comment on FOS adjudicators being given ‘special guidance’ on Barclays sales of the Aviva fund.
    Presumably this basically means that they are being lent on, like the Attorney General Lord Goldsmith was to change his mind over the legality of this governments invasion of Iraq.

    Unfortunately, unlike with Governments, we do not get a chance to vote the top brass at the regulator out of office. Maybe George Osborne will disband the FSA but he will have his hands full with trying to repair the economy which Gordon Brown has broken, so don’t hold your breath!

    On the economy I note that Gordon is still not big enough to admit ANY culpability, accept ANY responsibility or ANY blame. He was at the treasury for more than a decade and had a reputation for micro-managing everything and yet he now try’s to shift all responsibility abroad by telling us that it is all the fault of ‘Johnny foreigner’.

    The FSA is from the same mold as GB, micro-managing the SME’s while totally failing to see the bigger picture and letting the big financial institutions fleece the public by the million.

  22. Well done Mr;
    Anonymous | 27 Jan 2010 4:18 pm
    Could not have said it better myself.

  23. How many more dodgy IFA’s will arise before the FSA realises that independent advisors are just too independent for the good of consumers.

  24. Thank you Anonymous | 27 Jan 2010 5.15pm. Pity I cannot, if you pardon the expression, expose myself, but such is the threat of being eliminated by Adolf and the boys at Canary Wharf that we have to ‘go underground’. Crazy really is it not. No,I am not paranoid but I think they are outside right now!!!!

  25. Richard Wilkinson 28th January 2010 at 9:07 am

    No one seems concerned that apparently the firm may have given unsuitable advice to their clients……

  26. Consider the rather limited fine you would get for shop lifting or smashing a bottle in someone’s face! Has any banker been fined such an amount?

    Has there been a personal injury, a fraud or a disadvantaged client?

    In the Magistrates’ Courts offences that attract fines are subject to maximums of £5,000. It is only when you get to the Crown Court that there is no limit to the amount the Crown Court can fine, but that is subject to a judge and possible jury and the due process of the law and rules of evidence and also will take into account the seriousness of the offence and the offender’s ability to pay.

    Is it right that a fine of £49,000 can be levied by a quasi judicial body such as the FSA without regard to due legal process?

  27. A small suggestion guys (I assume you’re all guys given you’re almost entirely anonymous!!).
    Try actually reading the Final Notice on the FSA website instead of just throwing random bricks – then come back on here and tell me if you want colleagues and fellow professionals (hmm) like this remaining in the industry.
    Surely we can no longer defend firms that have “non-existent factfinds”, no evidence of research or status disclosure and – deep breath – at least two instances of occupational pension scheme transfers out without FSA permission.
    This isn’t victimisation – it’s the right outcome.

  28. Gillian, there are unfortunately too few posts like yours (they tend to kill threads dead as well).

    I was an IFA for 6 years, out of the business now after being mortified at the practices of my last employer, but still have the comments page of Money Marketing as one of my favourites (always good for a laugh!). I think a lot of the serial anonymous/ fsa joke regulator posters would read the final notice, and think “there but by the grace of God…..”. There cant be many other reasons for the vitriol on this thread, and the constant finger pointing towards the banks (“OK we are bad, but what about the banks???).

    I wonder how many similar firms to this there are? – based on the comments I read daily on this site, i’d wager a fair few. I’d also guess that they are populated primarily by “60 year old advisers with 35 year’s experience, that don’t like taking exams”.

  29. How much longer are we to tolerate these interfering, incompetent fools at the FSA?
    Their hypocrisy is revealed by their abuse of expenses, their incompetence shown by the catastrophic bank failures, and their self serving activities evidenced by their cosy relationship with banks and other lenders who are, it seems, immune from investigation or criticism. The FSA should be disbanded immediately although I acknowledge that this may cause distress in the hotel and travel business with whom they spend other people’s hard eaned money with such abandon.

  30. Scarlet Pimpernel 28th January 2010 at 3:13 pm

    Nice one! Simon Mansell | 28 Jan 2010 10:17 am.

    Hi Fellers; The FSA “Gestapo” lot at Canary Wharf, you know the “Clowns” that thought up that stupid; “Treating Customers Fairly” (TCF), who are now imposing this RDR; which will force us all into EXPENSIVE TIME WASTING EXAMS; Will to top it all; fine us if we make a mistake! I think I want to be a Crook instead now, because I have heard that they are “TREATING CROOKS FAIRLY” (TCF)!

  31. Scarlet Pimpernel 28th January 2010 at 3:33 pm

    A reply to; Robert Rice | 28 Jan 2010 2:00 pm

    Don’t knock the 60 year old advisers with over 35 year’s experience, for not wanting to take examinations. You only lasted 6 years; I am still in the trade ~ (but only just handing on by fingernails)!

  32. Scarlet Pimpernel 28th January 2010 at 4:40 pm

    Hi Fellers; The FSA “Adolf and his Gestapo team” at Canary Wharf, you know the “Clowns” that thought up that stupid; “Treating Customers Fairly” (TCF), who are now imposing this RDR; which will force us all into EXPENSIVE TIME WASTING EXAMS; Will, to top it all, fine us if we make a mistake!
    Now I think I want to be a Crook instead, because I have heard that they are “TREATING CROOKS FAIRLY” (TCF)!

  33. The World’s gone mad. Let’s invade Iraq! Oh that was done and now we have an inquiry spending millions achieving nothing. OH my that’s just like the FSA!

    How in one week can lenders be allowed to raise their SVR when others are being fined for charging £45 a month for people that fail to adhere to their mortgage agreements!

    The World’s gone mad mad mad.

    Just watched Andrew Marr’s History of Modern Britain. We never ever learn by our mistakes!

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