The FSA has fined Moneywise IFA £19,600 over compliance failings relating to the investment advice it gave to clients using platforms and discretionary portfolios.
Moneywise IFA was referred to the FSA’s enforcement and financial crime division as a result of the regulator’s earlier thematic review on platforms in March.
One of the director’s of Moneywise IFA, Malcolm Coury, was a co-founder of Ascentric. Without naming any individuals, the FSA says in its notice on the firm that it did not manage conflicts of interest appropriately.
An investigation by the FSA found that Moneywise IFA did not have robust arrangements for training advisers and ensuring suitability reports were clear, fair and not misleading.
Moneywise IFA also recommended platform-based investment to 519 customers but failed to ensure its advisers explained their rationale clearly to investors. The firm also failed to ensure its advisers understood the reasons behind these recommendations.
The regulator also found that Moneywise IFA had not made it clear to customers that some of the underlying investments contained unregulated collective investment schemes and the associated risks that needed to be understood before investing.
Despite these failings, the FSA did not find any evidence that customers had suffered any financial detriment. Moneywise IFA also appointed an external compliance consultant, made changes recommended by the consultant, and appointed a new compliance officer at board level.
Moneywise IFA qualified for a 30 per cent discount on its fine because of the improvements the company had made and Moneywise IFA’s agreement to settle at an early stage of the investigation. Had this not been the case Moneywise IFA would have been subject to a £28,000 fine.
FSA director of enforcement and financial crime Margaret Cole says: “As Moneywise’s business model evolved to include wrap platforms, sadly its compliance function and elements of its staff training did not keep pace.
“Firms that move to platform-based investment models need to ensure their advisers are properly trained and understand the nature of all of the underlying investments. They must also make sure they are properly supported by adequate compliance arrangements.
“It’s imperative that customers have a full understanding of where and how their money is being invested. Following the thematic review we’re seeing some good progress being made but it is vital that this continues to ensure investors are treated fairly.”