GDT’s failings were discovered during the FSA’s thematic work into how small firms give income withdrawal advice.
GDT has agreed to vary its permission so that any new income withdrawal business must be signed off by a suitably qualified independent person. GDT is also writing to all of its income withdrawal customers to make them aware of the risks of the product and offering them a review of their circumstances.
The FSA says in determining what action to take, it considered the current financial position of GDT, the future costs to the firm of varying its permission and its remedial work with customers.
A public censure is one of the regulatory actions the FSA can take when a firm breaches its rules and principles.
As part of its review of withdrawal advice, the FSA has asked firms visited to take remedial action and issued one firm with a private warning. The FSA has also given feedback to other small firms in this market based on the findings of the thematic work. It requires them to review their practices to ensure they meet the regulatory standard and treat customers fairly.
FSA head of investments small firms division Jonathan Fischel said:
“It is ultimately the firm’s responsibility to inform customers of the risks of financial products like income withdrawal. Providing consumers with information that is clear, fair and not misleading is a key element of treating customers fairly.
“Our recent work in this area showed that firms need to do more to ensure that they get it right. In light of this, firms should review their business and make sure that sufficient controls are in place to demonstrate the suitability of any recommendations.”