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PFS and CII in threat to kick out phoenix firms

The Chartered Insurance Institute and the Personal Finance Society are threatening to fine or expel any members involved in phoenixing.

Society president Brian Steeples warns that any members involved in phoenixing will be reported immediately to the CII’s disciplinary committee by the CII professional standards board. Firms found guilty of breaching the institute’s code of ethics and conduct will face fines, suspen- sion and possible expulsion.

It will also provide the FSA and the Financial Services Compensation Scheme with any evidence of members foisting their liabilities on the compensation scheme.

CII group public affairs director John Ellis says companies involved in decisions made by partner companies that lead to phoenixing could also face disciplinary action.

The CII’s tough stance ties in with the FSA’s pledge to crack down on phoenix firms.

Steeples says: “Not all situations stem from an intent- ional plan to avoid liabilities and businesses do fail in the normal course but phoenix schemes are detrimental to the reputation of the financial planners’ profession and are not within the spirit of the CII’s code of ethics.”

FSA spokeswoman Sam Bennett says: “We have sent a clear message to the industry about directors’ resp- onsibility for their own liabilities and we will make maximum use of our powers where necessary.”

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