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FSA fines Rockingham £35,000

The FSA has fined Rockingham Independent Limited £35,000 and imposed partial bans on its directors Stephen Hunt and Jonathan Edwards and adviser Gary Forster.

The regulator found a number of failures at the firm resulting in 426 customers near or at retirement age being potentially exposed to the risk of receiving unsuitable investment advice.

In March 2010, Money Marketing first raised concerns about Rockingham’s Rita product which included the ARM insured income plan, investing in life settlements. In July 2010, Rockingham suspended its advice arm following an FSA visit.

The FSA investigation found that 39 investors were advised to invest in unregulated collective investment schemes, after the firm failed to understand the regulatory restriction on the promotion of these investments.

Ucis cannot be promoted to the general public in the UK and should only be proposed to certain limited categories of investors such as sophisticated investors and high net worth individuals.

Rockingham also gave investors misleading descriptions of its pension drawdown Rita product, describing it as relatively low risk. One of the underlying investments that customers were offered to invest within the Rita wrapper was the ARM bond, investing in life settlement policies which did not provide a capital guarantee.

Rockingham recommended the ARM bond to cautious to moderately cautious customers and did not place restrictions on the amount placed in each underlying investment. The FSA found examples where all of a customer’s investment was placed in an ARM bond, which the FSA says could potentially leading to an inappropriate concentration of risk.

Rockingham made 426 advised sales between January 2008 and September 2010, including 39 Ucis sales and over 200 ARM sales.

Hunt and Forster have been banned from holding the significant influence functions and the controlled customer function relating to any regulated activity promoting or recommending Ucis.  

Edwards has been banned from performing compliance oversight in any regulated firm and from performing the customer function relating to any regulated activity promoting or recommending Ucis.

Rockingham has stopped selling any Ucis or structured products and has also agreed to conduct a past business review to determine whether any of the sales were unsuitable and whether any customer redress is neeeded.

FSA acting director of enforcement and financial crime Tracey McDermott says: “Rockingham and its advisers made the mistake of selling products that they did not fully understand. Rockingham and its advisers put hundreds of investors potentially at risk by advising them to put their money in Ucis and the complicated ARM bond. Advisers should take note: inappropriately advising customers to enter into unsuitable or complex products can not only lead to significant adverse consequences for those customers but also for the firms and the advisers themselves.

“We have previously warned about the particular risks of Ucis and life settlement products which are likely to be unsuitable for the vast majority of investors.  The industry must heed these warnings.”

Rockingham customers can contact Rockingham’s customer helpline on 01832 770460. The FSA says customers may wish to seek independent advice from another authorised firm if they have concerns about the advice they received.

The sanctions do not impact on Rockingham’s direct annuity business.


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. Great, more money to add to the ever increasing FSA pot of gold. What do you do with all this money FSA? Big bonuses coming up me thinks?

  2. Yet again more evidence of appalling advice to consumers. Many people deplore the actions of the FSA but they do need to get tough on these companies. The fine seems rather low.

  3. I agree with prior comment, £35k seems a small amount to fine a company which has obviously had a significant stream of income from potentially 426 poor sales!

  4. i think the FSA should be applauded for this type of action. one suspects that they mst have very good reasons for such a small fine

  5. I agree that the fine is surprisingly small. Also, the article fails to mention that Rockingham strongly recommended Keydata for years as a safe, low risk pension investment.

  6. One would suspet that Rockingham have “earned” more than £1m in commission from the clients concerned so the level of fine appears remarkably low, paticularly given that Rockingham have got “previous”. They have previously had their advice permissions withdrawn by the FSA, so what exactly are the FSA achieving by the new sanctions against some of Rockingham’s personnel? It is interesting that the FSA have not taken any action against Rockingham’s annuity arm. We regularly compete against Rockingham for annuity business, and I have lost count of the number of times we have been advised by a prospective client that Rockingham have obtained better rates than we have, only to find out that Rockingham have quoted on the wrong basis i.e. single life instead of joint life when we have suggested the client looks at the quote. One insurer has also let slip that a disproportionately high number of Rockingham cases have the structure of annuity changed once the funds are received from the ceding scheme, all of which suggests that the misleading advice is not restricted to UCIS, and it would interesting to know what investigations the FSA have carried out in to this area of Rockingham’s business.

  7. Perhaps Mr G R Harland might care to comment – traffic permitting.

  8. The losers’ scorn for the award is pure sour grapes !!!

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