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FSA fines IFA over UCIS failings

The FSA has fined IFA firm Specialist Solutions £35,000 for failing to adequately assess whether customers were eligible to receive unregulated collective investment schemes promotions and failing to ensure customers were given suitable advice to invest in them.

The FSA uncovered the issues with Specialist Solutions’ recommendations as part of its thematic review into the promotion of Ucis in 2010.

In October the FSA required Specialist Solutions to appoint a skilled person to review promotions of and advice given to customers to invest in Ucis during 2008 and 2009.

During that period, Specialist Solutions recommended Ucis to 101 customers who invested a total of over £11m in one or more of the three Ucis funds promoted by the firm.

In around 10 of the 20 files reviewed to date, the advice given to customers was found to be unsuitable.

The FSA expects Specialist Solutions to contact customers for whom it may have been unsuitable to invest in Ucis to provide redress to any who have suffered detriment.

The FSA has also publicly censured The Matrix Model Group (UK) Limited for failings in relation to sales of a geared traded endowment policy product.

The regulator found that The Matrix Model Group did not take reasonable care to ensure the suitability of its advice in recommending the GTEP product, that the firm failed to match customers’ attitudes to risk to the product profile and did not communicate the risks to customers.

The issues with The Matrix Model Group’s advice on GTEPs emerged during a thematic review in 2007. Matrix has since contacted all of its GTEP customers to complete new customer fact find documents and will then contact those customers who may have received unsuitable advice.

FSA head of retail enforcement Tom Spender says: “Our thematic work on both Ucis and GTEPs has uncovered a number of cases where there have been serious failings in the quality and suitability of advice given to customers. Failure to give suitable advice around the sales of complex investment products is unacceptable as it puts consumers at real risk of financial detriment.

“We expect firms to be able to demonstrate that they give their customers appropriate, well considered advice.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. In words of ABBA, “Money, money,money always sunny in the FSA world.”

  2. If firms advising the general public didn’t bother to point out the risks involved with UCIS or geared traded endowments, then it’s correct they should get dealt with appropriately.

    If firms acted properly, then they wouldn’t get fined, in the same way, if you don’t speed when driving, you won’t get caught by a speed camera. It’s not rocket science!

  3. If the regulator actually assisted then we would not have the problems. The fact that there are so many fines and bank problems is a clear sign that the current regulator and legislation are not working. It is about educating and this is something that the FSA are quite incapable of doing. They are quite happy to collect fines.

  4. @ ‘Pissed off IFA’

    I’m sorry but even your default level of FSA bashing cannot detract from the fact that retired elderly people with houses but little else were ‘advised’ to take out mortgages to then go into a bond which was then GEARED AGAIN by a bank loan. Gearing, onto of gearing…… and large amounts of commission to lubricate the greed of the salesmen involved.

    Sorry, you think this is somehow the FSAs fault?

    Do YOU think this sort of investment is too good to be true? Good…so do I, and so do mos other ethical, experienced advisers.

    Maybe FSA requiring extra qualifications (above 1 A level) for advisers and maybe stopping commission might not be a bad idea? Maybe you have heard of something called the RDR?

  5. @Dathan Steele

    Some good points however as these products are unregulated I think they can carry on merrilly paying ‘commission’ post RDR.

  6. @Sean

    I’m not so sure that UCIS will be able to pay commission to advisers. To be deemed independent post RDR an adviser will need to consider all the PRIPs, a part of which are UCIS investments.

    Does anyone know the rules around this?

  7. @dathan Steele

    Some very good points about the attitude of some people like piss off that give us all a bad name by defending IFA’s that sold these products in that way.

    All investment products should be regulated !

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