Former Financial Group compliance director Stephen Bell was on notice to improve the firm’s systems and controls, a final notice published by the FCA reveals.
Earlier today the regulator banned and fined Stephen Bell £33,800. It censured networks Financial Ltd and Investments Ltd, two subsidiaries of the group, in July for “systemic weaknesses” in their systems and controls.
Bell was responsible for compliance systems and controls at the firms between 20 August 2008 and 16 January 2013.
In a final notice published today, the FCA says Bell’s failings were serious as he was compliance director during the investigation into the firms’ misconduct and the final notice issued to ex-Financial Ltd director Charles Palmer in 2010.
The FCA says Bell had therefore been put on notice of the need for significant improvements in the firms’ systems and controls.
The regulator found that Bell failed to ensure the networks took sufficient steps to assess prospective ARs’ business models and practices; to adequately assess advisers’ knowledge and skills upon joining the group; to effectively supervise advisers; and to establish adequate compliance checks.
It says Bell introduced a licence programme whereby advisers were awarded a general licence for certain generic product groups and a specialist licence in respect of high-risk products such as income drawdown.
The award of a licence indicated that Financial Group regarded the adviser as competent in advising on a particular product type.
However, the process did not limit the types of product an adviser could recommend.
Upon joining Financial advisers could recommend all types of product, provided they held the appropriate qualification, and there was no defined policy which applied to advisers who had failed to obtain a licence, meaning they could continue to give advice for long periods.
Bell also established the supervision structure, including an annual competency course for supervisory staff.
However, the FCA found that supervisory staff had not attended the competency course since January 2011. There was also no formal training of supervisory staff documented in the firms’ compliance processes and procedures.
In addition, Bell introduced a risk monitoring system which produced risk ratings for advisers but failed to accurately reflect the risk they posed.