The FSA has fined IFA network Pi Financial £58,300 for unsuitable sales after it advised clients to invest £6m in unregulated collective investment schemes and £20m in structured products.
Shrewsbury-based Pi Financial has 72 investment advisers and 16 appointed representatives. Between 1 January 2009 and 3 February 2012, Pi advised 168 clients to invest in Ucis and 362 clients to invest in structured products.
The FSA’s supervision team visited in August 2009 and April 2010 and identified compliance weaknesses at the network. Two skilled persons reports were then carried out, followed by another FSA review of Pi’s systems and controls and a review of files relating to Ucis, structured products and pension switching recommendations.
Of the 28 files reviewed, 14 were deemed to be unsuitable. None of the seven files relating to Ucis sales demonstrated that clients came under the relevant exemptions for Ucis promotion, such as being a sophisticated, high net worth investor.
One client with a moderate attitude to risk was advised to move all of his pension funds other than those held in a final salary scheme into a Sipp, with £51,000 invested in a Ucis and £34,000 invested in a structured product.
All five of the structured product files reviewed were deemed to be unsuitable. Three clients were advised to invest over 90 per cent of their Sipp in structured products.
Four of the 17 files on pension switching, including two Ucis sales, were found to be unsuitable.
FSA head of retail enforcement Georgina Philippou says: “Pi’s failings were serious. The firm sold Ucis and structured products to ordinary retail investors, when these products were clearly unsuitable for their needs.”
Pi Financial chief executive Tim Sutcliffe says a past business review is being carried out and redress will be paid to clients where appropriate.
Syndaxi Chartered Financial Planners managing director Robert Reid says: “If we see more fines being levelled at other firms for unsuitable Ucis sales, we could see some firms shut down as a result.”