The FSA has publicly censured Exclusive Asset Management Limited for systems and controls failings.
The regulator says the firm Birmingham-based firm also showed an inability to demonstrate the suitability of its advice and failing to communicate with clients in a clear, fair and not misleading way.
The case is related to that of Gary John Hexley who worked for Exclusive between January 15, 2009 and May 25, 2010 and was publicly censured and prohibited by the FSA on June 13, 2011 for giving customers unsuitable investment advice.
The failings were found during an unannounced visit to the firm’s offices in April last year. The investigation found a number of systems and controls failings specifically in relation to Hexley’s compliance standards. Despite issues being identified by Exclusive it failed to ensure sufficient monitoring of Hexley which meant that he failed to obtain and record sufficient information about customers before giving them advice, adequately explain the reasons for his recommendations, assess adequately customers’ attitudes to risk, and research product recommendations instead relying on a small selection of preferred investments which yielded higher commission.
The FSA also found that Exclusive failed to ensure ongoing training and competency of its staff, record sufficient information about customers’ personal and financial circumstances to ensure the suitability of any advice it gave as well as ensuring that its systems and controls were adequate to monitor the suitability of advice.
Exclusive went into administration on May 24, 2011. The regulator says that had this not have been the case it would of incurred a £60,000 fine.
FSA head of retail enforcement Tom Spender says: “The fine we would have levied on Exclusive reflects the seriousness of the failings found at the firm. Financial advisers and providers alike must take notice of Exclusive’s failings and ensure they learn from them. Firms operating in this industry must comply with the FSA’s rules and we will take robust action against firms and individuals who fail to demonstrate the required standards.”