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The lessons of the Aaron case

David M Aaron (Personal Financial Planners) has been banned for life in what the FSA calls one of the most serious cases of misselling it has investigated.

At the root of the problem were sales of precipice bonds or what are now officially called structured capital at risk products, although they were called neither when the bulk of them were sold.

The FSA has pulled no punches but it has curiously issued a lifetime ban against the firm itself. Most directors remain deauthorised although one has already reapplied and is back advising under supervision. None of the Aaron directors has been banned for life at least not yet – not as easy a route for the FSA to pursue anyway.

These are very strong words from the regulator, heaping guilt on a business and questioning the fundamentals of its risk assessment and marketing. The resulting claims and the burden expected to fall on next year&#39s compensation scheme will have many IFAs who did not touch these products up in arms.

One question must be addressed to the regulator – the company did not exactly hide its light under a bushel. Everyone knew of it, everyone knew that the firm had got very good at selling these products through its guides. If it was going wrong for the last few years, why did the FSA not get wind of this earlier?

The Aaron case may prove that the FSA is still not quick enough off the mark in prevention.

As for Aaron, did he believe that his company was embroiled in one of the worst cases of misselling? We think not. But did the firm push the boundaries of acceptable marketing too far? It would seem so.We hope that this case proves to be the exception.

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