A crucial FSA letter to banned IFA David M Aaron praising the firm’s marketing material was considered irrelevant by the regulator when it ruled that the company missold.
The letter from the FSA standards division congratulates David M Aaron (Personal Financial Planners) on its product material for being “generally well designed and written and therefore useful to consumers”.
When the FSA banned the firm for misselling precipice bonds, it said the firm “failed to issue advertisements and financial promotions that were clear, fair and not misleading.”
Dated November 22, 2002, the letter seen by Money Marketing, falls in the period between January 1998 and June 2003 that the FSA says David M Aaron (Personal Financial Planners) missold.
Another insider alleges that the lawyers brought the letter to the attention of the tribunal but it was never referred to in the case.
The FSA letter is in response to one from the firm regarding its risk ratings. It says: “However, we appreciate that any rating your firm awards a product can be subjective in that it is your firm’s own opinion, in which it is entitled to have provided it is honestly held.”
The tribunal found that in this period Aaron “failed to carry out satisfactory risk assessments or to make suitable recommendations”.
When asked if he recalled the letter David Aaron said he did. He says: “The letter highlights that although the FSA disagrees with the way we rated risk, it understands the process to be subjective and that we were entitled to assess risk in this way. I believe that the FSA was aware of this letter during the proceedings against us.”
FSA head of communications Rob McIvor says: “The case has been heard. All those involved in the case had an opportunity to put their case forward. Clearly, the regulatory decisions committee did not consider that it made any difference to the judgment.”