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FSA fines firm £140k over compliance failure

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  • 23/04/2002
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An adviser firm has been fined £140,000 by the Financial Services Authority (FSA) for compliance fai...

An adviser firm has been fined £140,000 by the Financial Services Authority (FSA) for compliance failure, including insufficient record keeping, inadequate ‘reasons why’ letters and incompetent monitoring procedures.

The news follows concerns ‘ previously reported by Mortgage Solutions ‘ from IFA network Bankhall which noticed a trend of advisers failing to complete client audit trails, particularly when recommending products.

Tony Murrell, operations director of the IFA network Bankhall, said advisers needed to shape up before the regulatory regime comes into force in 2004.

‘It is imperative now more than ever that anyone giving advice can demonstrate how they arrived at a product recommendation. Many people that give advice do not have appropriate systems in place. This is especially a problem for small businesses that do not have compliance departments,’ he said.

According to the regulator, the charges against Shawlands Financial Services Limited ‘ formerly known as Frizzell Life & Financial Planning Limited ‘ related to back-to-back policies which were arranged between June 1992 and October 1997.

The FSA said Shawlands had failed to keep sufficient records of client information or instructions received from clients, had given inadequate written explanations to clients of the ‘reasons why’ recommendation and failed to establish adequate monitoring procedures by applying a standardised approach.

Problems with record keeping among adviser firms were also confirmed by the Mortgage Code Compliance Board’s (MCCB) annual report last year. Statistics from the MCCB indicated 23% of firms breached the code on adequate record keeping.


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