The FSA has fined IFA firm Care Asset Management £56,000 for giving unsuitable advice on Keydata products.
The Manchester-based firm advised 98 clients to invest a total of £3.1m in Keydata’s life settlement products between September 2005 and April 2009.
CAM’s clients have so far received a total of £1.96m in compensation from the Financial Services Compensation Scheme in relation to Keydata.
The FSCS continues to seek additional repayment from CAM to cover losses suffered by its clients, most of whom were in or near retirement.
The FSA says the firm failed to assess the products and judged them to have a lower risk profile than was appropriate, leading to unsuitable sales.
CAM failed to ensure it understood the risks customers were willing to take, failed to provide written documentation to customers describing Keydata products’ risk adequately and failed to monitor the sale of the products.
CAM was granted a 30 per cent reduction in its fine as it co-operated fully with the regulator. Without the discount the fine would have been £80,000.
FSA head of retail enforcement Bill Sillett says: “This case highlights once again that advisers cannot rely simply on the opinions of a provider when giving advice about their products. They must form their own views as to the riskiness of the product and do their own due diligence before recommending the product to their customers.”
Forty Two Wealth Management partner Alan Dick says: “It is unfortunate that advisers were investing in Keydata when they clearly had not done enough due diligence to recognise the risks involved. Anything with the term ‘life settlement’ involved should obviously be treated very carefully and not used as a significant portion of a client’s investment portfolio.”