The FSA has today confirmed it has cancelled permission rights to trade of David Aaron Partnership, following the liquidation of the firm earlier this year.
A final notice posted on the website this morning reveals the Financial Services Authority has removed official Part IV rights to trade because of several regulatory breaches between January 1998 and June 2003 relating to the “mis-selling” of Structured Capital at Risk Products (SCARPs).
In particular, the FSA alleges the David Aaron Partnership license was removed because it missold “a substantial number of SCARPS” and its “internal risk assessment process was fundamentally flawed” and therefore made errors over a number of years, largely because the firm failed to check how products were being managed, and its own statements about SCARPS contained misleading statements.
The FSA says the firm’s licence was withdrawn for its:
Even though the firm is now in liquidation, the FSA argues in its notice mistakes made were so serious they should be a matter of public record.
The FSA says the firm completed over 53,000 regulated product transactions between January 1998 and June 2003.
Of these, almost 15,000 were structured products, of which around 7,900 were SCARPS, suggests the FSA, even though David Aaron Partnership was unable to provide specific figures.
At least 15% of the structured product sales were undertaken following advice from the firm, while the remainder were sold as direct offers, says the FSA.
FSA supervision officials visited the firm in April 2003, and duly reported:
On 22 April 2003, following the Supervision visit, which had been prompted by concerns arising from the desk-based review, the FSA wrote to the firm regarding SCARPs stating "we are still not satisfied that all those concerns about the suitability of sales have been allayed. We are discussing our conclusions and expect to write again shortly with a more detailed consideration of the outstanding issues."IFAonline
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