Former Financial Ltd chief executive Charlie Palmer has defended how he operated the troubled business, including a board policy anticipating one in 50 clients would experience misselling.
In an interview with Money Marketing he gives his side of a story that saw the network face the full force of the regulator’s microscope and eventually be sold.
In a final notice published in December 2015, the FCA sought to ban and fine Palmer £86,691 for failing to ensure appointed representatives gave suitable advice to around 40,000 clients.
Palmer referred the matter to the Upper Tribunal with the FCA telling Money Marketing this week the hearing is unlikely to take place until next year.
In the decision notice against Palmer, the FCA said he failed to take adequate steps to ensure risks were managed effectively.
The regulator said Financial Ltd’s business model allowed ARs and individuals a high level of freedom and flexibility, putting around 40,000 clients at “significant risk” that they would receive unsuitable advice. The regulator says this includes high risk products such as unregulated collective investment schemes.
However Palmer disputes the regulator’s findings.
He says: “I don’t agree I did anything wrong. I’m not sure the notice says I did much wrong. The FCA has changed their case against me six times over four years.”
Palmer adds: “What are the findings? They are a breach of principle. There is no benchmark standard as to what is appropriate, there is no rule breach. In most enforcement action nowadays there are no rules broken and there are no guidance breaches either. It was simply that [the FCA thinks] your procedures are in breach of the FCA’s principles for business.”
Palmer also disagrees with the fine and explains the process Financial Ltd took in deciding the level of risk it was willing to take on misselling.
“As a board we decide what level of risk you are willing to take. That is the error ratio, you cannot sell 25,000 contracts a year without any misselling. You don’t accept any misselling but you have to have a level and the way you run the business that if it is not breached then you are happy to accept that.”
“We decided a 2 per cent error rate was acceptable so it was one in 50 cases sold or advised on is a wrong’un and we were happy to accept that level of error-rate, bearing in mind 49 people had a good deal for every one person that had a bad one. That level was never breached.”
A past business review into pension switching at Financial is ongoing and being carried out by parent company Tavistock Financial, which acquired the Financial network in February 2015.
There is also an ongoing review into Ucis sales.
If it is required, it is understood Tavistock will pay redress to consumers following the outcome of those reviews.
Palmer says around 250 of Financial Ltd’s advisers remained within Tavistock after the business was acquired while approximately 100 are now directly authorised.
Palmer is now chairman of compliance business IFA Compliance.
Of his current relationship with the FCA, Palmer says: “As a consultant I have a very good relationship with the FCA. There is no personal animosity. They have got a job to do and they do it.”
Palmer was previously investigated by the FSA in 2009 and fined £49,000 by the regulator in 2010 over the risk of unsuitable pension switching advice.
The FCA declined to comment.