FSA fines York based investment firm GBP28,000 for advice failings
2nd October 2008The Financial Services Authority (FSA) has fined TBO Investments Limited (TBO) GBP28,000 for failing to clearly document the explanation of the risks of transactions to clients. It also failed to make and retain records that demonstrate the suitability of its advice and ensure that its business is conducted in accordance with FSA requirements.
Jonathan Phelan, FSA Head of Retail Enforcement, said:
"Obtaining and clearly recording enough information from customers to ensure the advice given is suitable is an important part of treating them fairly, particularly in areas such as long-term savings and pensions, where the wrong decisions could lead to hardship in retirement. Where we have concerns about the quality of the advice given, we will require firms to undertake reviews of past business, often at considerable cost to them, to identify and remedy any unsuitable advice."
Between December 2001 and October 2007, TBO failed to:
- obtain and retain sufficient information about customers' personal and financial circumstances and objectives, leading to an unacceptable risk of unsuitable investment advice being provided to TBO's customers;
- issue suitability letters that consistently explained why the relevant transaction was suitable for the customer in question;
- adequately supervise and monitor staff providing advice to customers; and
- arrange adequate systems and controls in relation to trust signatures.
In order to address the potential risk of unsuitable recommendations having been made to customers, TBO has appointed an external compliance consultant to undertake a past business review of a percentage of sales of certain products selected on risk-based criteria, which will: identify any unsuitable recommendations; assess any loss to customers; and pay appropriate redress where unsuitable advice has led to loss.
