The FSA has fined investment firm Accendo Markets £56,000 for failing to have adequate risk management systems in place.
Accendo’s compliance officer and director Gregory White has also been fined £10,000 for his role in the firm’s failures.
Accendo Markets provided advice to customers and arranged dealings in contracts for difference products, which the FSA describes as high risk products which can expose customers to losses exceeding the original investment.
The FSA found the firm failed to gather adequate client information before providing advice, and failed to keep records of customers’ trading strategies. It also failed to have a robust compliance monitoring programme in place.
Accendo also appointed brokers who did not hold the necessary qualification required by the FSA and failed to distinguish between execution-only and advisory trades.
The regulator says this created the risk of customers entering into transactions which were unsuitable for them, given their level of investment understanding or experience.
The FSA also found that as compliance officer White failed to comply with FSA requirements and did not exercise due skill, care and diligence.
FSA head of retail enforcement Tom Spender says: “The FSA regards breaches of its compliance requirements extremely seriously. Customers rightly expect the advice they are given to be based on a robust and properly recorded examination of client suitability – particularly in the case of high risk products such as contracts for differences.”
The regulator notes “significant steps” have subsequently been taken to correct Accendo’s failings.