Ongoing concerns about the amount of unsuitable pension advice written at Leeds-based IFA Park Row were at the heart of FSA action against the company.
A quarter of cases written by the Royal Liver-owned company's advisers continued to be "unsuitable" despite warnings going back more than two years, the FSA's final notice says.
The FSA today publicly censured the distribution business for unsuitable risk controls, fining its former CEO Peter Sprung and ordering it to pay customer redress estimated at between £5m and £7.8m.
According to the regulator, Park Row, currently in the process of being wound down, recklessly failed to ensure proper advice was given on pensions, mortgages and investments.
Its final notice reveals a catalogue of alleged adviser wrongdoing dating back to 2006, including cases of commission bias, and says the company even identified instances of practitioners giving advice without the required FSA permissions.
However, it was the company's pensions recommendations which came under particular scrutiny, with both Park Row's internal compliance audits and external FSA checks finding numerous cases of potential mis-selling.
Although it notes the company often issued guidance and warnings to its advisers highlighting cases of wrongdoing, the FSA says its actions were inadequate.
Two internal compliance checks Park Row undertook in October 2007, including of SIPP recommendations and personal pension transfer advice, identified instances of unsuitable advice.
Customers in the vast majority of cases, it found, may have been more suited to another product.
Although Park Row announced plans to check 100% of pensions advice cases from then on, it stated in board minutes dated January 2008: "there is no evidence of any mis-selling".
Also in 2007, Park Row was forced by the FSA to hire a skilled person (SP) to review pensions advice cases.
In a report published in January 2008, the SP reported 12 of 23 high-risk cases should have been categorised as a ‘fail' by the compliance team. Three were deemed ‘unsuitable advice'.
Of 56 low-to-medium risk cases, the SP identified 19, or 34%, case 'fails'.
A further SP report, in January last year, found that in 23 of 100 cases, another product may have been more suitable while, in 3 cases, there was a high probability of consumer detriment.
The FSA's final notice also reveals that, despite finding evidence of advisers basing their recommendations on the commission available, Park Row did little to eradicate it from the business.
Although the company later removed the option to select the highest-paying product from the sales process, the final notice concludes Park Row "failed to conduct any further work to establish the magnitude of this problem".
Elsewhere, it says the company identified instances of advisers operating without the proper FSA permissions, particularly in 2007, but did not take steps to detect other cases or follow-up on those it found.
Achievements, charity work and other happy snippets
'A win for advisers'
Unconstrained multi-asset fund managed by Talib Sheikh
Who made the cut?
Transferring out of DB scheme