The FSA has taken its first enforcement action against a small adviser firm arising from a treating customers fairly (TCF) visit.
It has imposed a ‘public censure' on Cheshire Life & Pensions for failing to ensure its advice on pension income drawdown products was suitable.
It has also ordered Cheshire to write to all its income drawdown customers, undertake a past business review and use an external compliance specialist to provide ongoing advice and oversight.
The FSA says problems at Cheshire were picked up last year by an FSA team conducting a TCF visit as part of its enhanced supervisory strategy for small firms.
According to the regulator, the adviser failed to gather or record adequate information about customers' personal and financial circumstances to support its assessment of suitability.
In particular, it says fact finds did not record that alternatives to income drawdown had been discussed, or include sufficient details about why income was required in the first place.
Among a number of other 'failings, the regulator says often the risk rating of the recommended product did not appear to match the customer's attitude to risk at the time the recommendation was made.
It says it failed to undertake sufficient research to ensure the suitability of recommendations.
"This public censure puts advisory firms on clear notice that they must have the right arrangements in place to ensure that suitable advice is given and recorded for investment products such as income drawdown," FSA director for small firms Lesley Titcomb says.
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