Derbyshire firm and its two partners fined a total of GBP49,000
27th January 2010The Financial Services Authority (FSA) has levied fines totalling GBP49,000 on a Derbyshire based financial advice firm and its two partners.
The failings at Sett Valley Insurance Services (Sett Valley) were identified during an FSA visit focussing on the fair treatment of customers, as part of its assessment programme for small firms.
The subsequent FSA investigation identified a number of problems with the firm's sales and advice processes, including a failure to record sufficient information about customers' personal and financial circumstances to ensure the suitability of any advice they gave, and a failure to communicate with them in a way that was clear, fair and not misleading. The firm's systems and controls were also inadequate and did not meet the FSA's requirements.
This case highlights the risks posed by limited control and oversight and the failure of senior management to ensure that their firm can demonstrate the suitability of its advice.
Both of Sett Valley's partners, Leslie Lugsden and John Hargreaves, were responsible for the problems identified within the firm, and therefore failed in their roles as approved persons performing a significant influence function to ensure that their firm complied with the FSA's rules.
Lugsden and Hargreaves were each fined GBP10,500 for breaching the FSA's Statement of Principles for Approved Persons. Sett Valley was also fined GBP28,000 for breaching the FSA Principles for Businesses.
Sett Valley is also to appoint an external compliance consultant to conduct a phased past business review of products sold and compensate any customers who may have suffered loss.
Margaret Cole, director of enforcement and financial crime at the FSA, said:
"It is unacceptable for a firm operating in this industry not to comply with the FSA's principles and rules.
"The partners of Sett Valley failed to control their business effectively and exposed their customers to the risk of receiving unsuitable advice.
"The fine levied on Sett Valley reflects the seriousness of the failings found at the firm while the fines imposed on the partners demonstrate the importance we place on senior management discharging their responsibilities effectively. Had they not agreed to settle this enforcement action at an early stage, the fines would have totalled GBP70,000."
