The FSA has fined two former directors of Alpha to Omega (UK) a total of £42,000 for widespread compliance failings leading to the risk of unsuitable investment advice.
A2O compliance director Andrew Ruff has been fined £28,000 and has been banned from performing any significant influence function, while managing director Richard Lindley has been fined £14,000.
The fines follow an FSA review of customer files of an A2O appointed representative in March 2009, after which A2O was required to appoint a skilled person to review the IFA network’s compliance systems.
The skilled person found widespread compliance failings, leading to the risk of clients receiving unsuitable investment advice.
The FSA says this was particularly problematic where clients had been recommended high risk investments such as unregulated collective investment schemes.
A2O agreed to stop its ARs recommending a number of UCIS schemes, but failed to improve its compliance systems. A2O was forced to stop all regulated activities in January 2010.
Ruff and Lindley were fined because they failed to effectively monitor and control sales made by its ARs. The fines were also due to the failure to ensure systems and controls weaknesses were addressed, and because they failed to oversee their advisers.
A2O also failed to collect relevant and accurate management information, and failed to act to correct the behaviour of its ARs.
FSA acting director of enforcement and financial crime Tracey McDermott says: “Lindley and Ruff shared the ultimate responsibility for ensuring the financial advice provided by their network of advisers was suitable for their clients. They both failed in their responsibilities and this resulted in unsuitable advice being provided to some clients.
“Those who oversee networks of ARs need to ensure that they keep a close eye on the advice being given throughout their network, especially where the advice includes high risk products such as UCIS. If there are failings in the way customers are treated anywhere in the network, the principals will be held to account.”