The FSA has imposed a £125,000 fine on Interdependence Limited for failure to properly oversee appointed reps who advised clients to withdraw cash early from their pension funds.
As a result, several hundred clients may have been mis-sold contracts, and Interdependence is currently investigating a sample of 65 cases to determine whether further action is required covering the period 1996 to 2002.
Depending on the outcome of the sample review, due to be published by 30 June, Andover, Hampshire-based Interdependence may extend the review to a greater number of customers, and may pay compensation in cases where mis-selling is identified.
"These findings are particularly serious as they affect the pension assets of vulnerable customers approaching retirement,” says David Kenmir, retail intermediaries sector leader at the FSA.
"Firms must ensure that their recommendations to clients are suitable and they should build this principle into their monitoring of advisers. We will continue to keep a close eye on how appointed representatives are monitored."
Interdependence’s troubles stem from a pre-approval system put in place in early 1996, which failed to sufficiently monitor the suitability of proposed transactions put to clients.
For example, in some 90% of cases submitted between March 1999 to March 2000 there is no evidence of actually receiving the documentation that should have been submitted in cases where approval was required, the FSA says.
There was an overall failure by the firm and its ARs to maintain records showing they complied with regulatory requirements in relation to pension fund withdrawals, the regulator adds.
The FSA also notes that Interdependence “was fined £35,000 by PIA for rule breaches in the period from October 1997 and January 1999.”
”Interdependence was also fined £175,000 by PIA in November 1998 for breaches in respect of its Pensions Review during 1997, which included similar control issues in respect of its Appointed Representatives.”IFAonline
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