The FSA has today fined a stockbroker £250,000 for using high pressure sales tactics and misleading information to sell customers shares they did not want or could not afford.
Square Mile Securities Limited was originally fined £1.5m but this was reduced due to the firm’s financial circumstances and agreement to settle at an early stage in the investigation.
The FSA reviewed 55 transactions carried out by Square Mile between March and May 2006, some of which involved vulnerable or inexperienced investors.
Square Mile was using a high pressure sales model that put customers at risk and did not carry out appropriate controls. Furthermore, the firm knew its advisers were using unacceptable sales tactics and even failed to get a customer’s consent before selling them high-risk shares.
In addition, Square Mile made false statements and provided inaccurate and misleading information. The firm also failed to provide details about the risks posed by certain shares.
Margret Cole, director of enforcement at the FSA, says: "High pressured sales practices are wholly unacceptable. Firms that use such sales tactics undermine the regulatory requirement to treat customers fairly. A firm's customers are entitled to rely on it to provide them with advice and information that is clear, accurate and not misleading.”
She says the FSA is currently reviewing how stockbrokers conduct their business and the regulator will take action against those who fall below the expected standard.
Since the investigation, Square Mile has made changes to its senior management and has taken on an adviser to assess its systems and sales practices and make suitable compensation to customers.
Square Mile will be sending all customers a letter advising them of the findings together with information on how to make a complaint.
If you would like to comment on this story, contact:
Tel: 020 7034 2682
e-mail: [email protected]
Joined as head of strategy, multi asset, in June
Group income protection
Nine in 10 do not have income protection
Set to become part of Single Financial Guidance Body