The FSA has issued its first IFA fine related to platform advice after Moneywise IFA was hit with a £19,600 penalty over compliance failings on its use of platforms and discretionary portfolios.
Moneywise IFA was referred to the FSA’s enforcement and financial crime division as a result of the regulator’s earlier thematic review of platforms in March.
One of the directors of Moneywise IFA, Malcolm Coury, was a co-founder of Ascentric. Without naming any individuals, the FSA says in its final notice on the firm that it did not manage conflicts of interest appropriately.
The notice states that alth-ough the firm disclosed this conflict of interest, there was “no evidence that the conflict was being managed and reviewed by the compliance function or that the compliance officer at the time had sufficient seniority in the business to manage such potential conflicts”.
The FSA investigation found that Moneywise IFA did not have robust arrangements for training advisers and ensuring suitability reports were clear, fair and not misleading.
The FSA final notice states Moneywise IFA recommended platform-based investment to 519 customers but failed to ensure its advisers explained their rationale clearly to investors. The firm also failed to ensure its advisers understood the reasons behind these recommendations.
The regulator found that Moneywise IFA had not made it clear to customers that some of the underlying investments contained unregulated collective investment schemes and the associated risks that needed to be understood before investing.
Despite these failings, the FSA did not find evidence that customers had suffered any financial detriment. Moneywise IFA also appointed an external compliance consultant, made changes recommended by the consultant and appointed a compliance officer at board level.
FSA director of enforcement and financial crime Margaret Cole says: “As Moneywise’s business model evolved to include wrap platforms, sadly, its compliance function and elements of its staff training did not keep pace. It is imperative that customers have a full understanding of where and how their money is being invested. Following the review, we are seeing some good progress but it is vital that this continues to ensure investors are treated fairly.”