The FSA has fined one IFA firm and censured another for advice failings on unregulated collective investment schemes (UCIS) and geared traded endowment polices (GTEPs).
Specialist Solutions was fined £35,000 for failing to adequately assess customers were eligible to receive UCIS promotions and not ensuring they were given suitable advice to invest in them.
The FSA says it uncovered the issues with Specialist Solutions as part of its thematic review into the promotion of UCIS in 2010.
In October 2010 the FSA ordered the firm to appoint a skilled person to review promotions and advice given to customers to invest in UCIS in 2008 and 2009.
The firm recommended UCIS to 101 customers who invested a total of over £11m in one or more of the three UCIS funds promoted by the firm during that time.
Specialist Solutions failed to comply with legislation governing the promotion of UCIS, and in nearly 50% of the 20 files reviewed to date for suitability the advice given to customers was found to be unsuitable, the FSA says.
Specialist Solutions must contact customers for whom it may have been unsuitable to invest in UCIS to offer redress to any who have suffered detriment.
The FSA has also publicly censured The Matrix Model Group for failings in relation to sales of a GTEP product.
The Matrix Model Group did not take reasonable care to ensure the suitability of its advice in recommending the GTEP product, says the regulator.
The firm failed to match customers' attitudes to risk to the product profile and did not communicate the risks involved with the GTEP product to customers, the FSA says.
Issues with The Matrix Model Group's advice on GTEPs came to the FSA's attention during a thematic review of GTEPs in 2007.
The Matrix Model Group has since contacted all of its GTEP customers to complete new customer fact-find documents and will subsequently contact those customers who may have received unsuitable advice.
Tom Spender, head of retail enforcement at the FSA, says the regulator's thematic work on both UCIS and GTEPs has uncovered a number of cases where there have been serious failings in the quality and suitability of advice given to customers.
Specialist Solutions was originally fined £50,000 but agreed to settle at an early stage and therefore qualified for a 30% discount.
The FSA originally sought to impose a fine of £45,000 on The Matrix Model Group. However, The Matrix Model Group provided verifiable evidence that this would cause serious financial hardship.
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