The FSA suspended Alpha 2 Omega from all regulated activities after the network repeatedly failed to correct a catalogue of compliance and training failings identified by the regulator.
The FSA recently published a second supervisory notice detailing why it suspended the network on January 21, 2010. The network went into administration on January 26 and was declared in default by the Financial Services Compensation Scheme in August. The FSCS has so far received 180 claims against the firm.
The FSA says it had concerns about the oversight of regulated product sales through A2O’s appointed representatives and on May 8, 2009 it told the network to commission a skilled person’s report.
The report was presented to A2O on October 15, 2009, and to the FSA on October 19. It highlighted 13 serious failings in A2O’s systems and controls.
Among them was a failure to carry out sufficient checks on new recruits, a failure to follow its own training and competence scheme, poor fund research and poor suitability reports.
It also found that not all high-risk business was being reviewed beyond a fact-find and suitability report. The supervisors at A2O passed 99 per cent of files reviewed but the skilled person failed 98 per cent.
On October 30, the FSA wrote to A2O asking it to describe any improvements, whether already made or planned.
A2O responded with a nine- point document highlighting the improvements it intended to make but the FSA says the response indicated a failure to appreciate the seriousness of the concerns raised.
Despite subsequent discussions, the FSA says the network failed to remedy the situation.
A2O had 50 ARs at the time it was placed into administration. Simon Underwood and Rupert Mullins of Benedict MacKenzie were appointed joint administrators.
Syndaxi Chartered Financial Planners managing director Rob Reid says: “I think the FSA should have accelerated the process as it had given A2O a number of warnings. It could potentially have placed more clients at risk.”