The FSA has fined Rockingham Independent £35,000 for putting 426 clients at risk of receiving unsuitable advice and imposed partial bans on directors Stephen Hunt and Jonathan Edwards and shareholder Gary Forster.
In its final notice against Rockingham, published last week, the FSA says Rockingham made 426 advised sales between January 2008 and September 2010, including 39 unregulated collective investment scheme sales and over 200 ARM sales.
Money Marketing first raised concerns about Rockingham’s pension drawdown retirement income tri-investment account in March 2010.
Rockingham described itself as whole of market but tended to recommend investment in its Rita product, a 10-year annuity product wrapped in a Sipp. In 2010, Rita sales represented 20 per cent of Rockingham’s business.
One of Rita’s underlying investments, the ARM bond, was investing in life settlement plans and offered no capital guarantee. Out of 10 client files reviewed by the FSA, six customers assessed as either moderately cautious, balanced, or moderately adventurous were advised by Rockingham to invest all their money in the capital at risk ARM bond. Rockingham also failed to understand FSA rules around Ucis promotions and failed to include information on the risks of Ucis in suitability reports.
The FSA says the firm “acted recklessly” in allowing Edwards to continue to be responsible for compliance, after he told the board in March 2009 that he was not able to carry out the role.
Hunt and Forster have been banned from holding significant influence functions while Edwards has been banned from performing compliance oversight in any regulated firm.
All three have been banned from any regulated activity promoting or recommending Ucis. Rockingham has stopped selling any Ucis or structured products and has also agreed to conduct a past business review.
FSA acting director of enforcement and financial crime Tracey McDermott says: “We have previously warned about the specific risks of Ucis and life settlement products. The industry must heed these warnings.”