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Tribunal upholds FCA ban and fine for ex-network chief

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  • 09/08/2017
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Tribunal upholds FCA ban and fine for ex-network chief
The Upper Tribunal has upheld a ban and fine given by the Financial Conduct Authority (FCA) to the former CEO of an advice network.

The tribunal agreed with the FCA that former-CEO of Standard Financial Group Charles Palmer had failed to act with due skill, care and diligence in carrying out his role.

It upheld the ban from performing significant influence functions and the fine of £86,691.

 

Series of warnings

Palmer had built the network based on two firms (Financial Limited and Investments Limited), which at its peak in March 2011 numbered 397 appointed representatives (AR) and 516 registered individuals (RI).

Following a series of warnings by then regulator the Financial Services Authority (FSA) a final notice was issued in February 2010.

Between 24 February 2010 and 20 December 2012, the firms’ ARs and RIs collectively provided advice to approximately 40,000 customers.

However, the regulator noted that Palmer did not respond adequately to the failings found in that notice and it took action, eventually leading to the ban and fine issued in 2015.

 

Customer risk

In 2015, upon cancelling the permissions of the firms, the FCA noted several failings in the way the network was operated.

“The business model that Mr Palmer developed and maintained focused on serving ARs and RIs and allowed ARs and RIs to be afforded a high level of flexibility and freedom as to how they could operate within the adviser network,” it said.

“This business model thereby increased the risk to underlying customers inherent in an adviser network, and gave rise to material risks to underlying customers, including the increased risk that the firms would be unaware of, or unable to prevent, ARs and RIs giving unsuitable advice or selling unsuitable investments.”

 

Did not learn lessons

It added that Palmer must have been aware that the firms’ business model gave rise to material risks to underlying customers, and of the need for appropriate controls and mitigating measures to be in installed because of the final notice issued in February 2010.

FCA executive director of enforcement and market oversight Mark Steward said: “Mr Palmer’s conduct fell well below the standards the FCA would expect of a senior manager of an authorised firm.

“His conduct was made worse by the fact that he did not learn lessons from and address the failings highlighted to him in 2010.”

Palmer has been given permission to appeal to the Court of Appeal.

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