Pave Financial Management is to have its permissions cancelled by the FSA following the mis-selling of unregulated collective investment schemes (UCIS), with two of its directors also being punished.
In decision notices published on its website this week, dated 3 November, the FSA said the company's sales model and practices exposed customers to "a very significant risk of financial loss despite no evidence that they could sustain such losses".
Some customers were advised to remortgage their homes to raise funds to invest in UCIS with no documented assessment of their capacity to sustain losses, while others were advised to switch from existing pension schemes and to establish SIPPs where the underlying investments included high concentrations of UCIS.
The case has been referred to the Upper Tribunal, which will make a final decision on Pave and its directors.
The failings at the Somerset-based company occurred between 15 November 2005 and 4 August 2010.
One of the directors, Timothy Pattison, has been fined £90,000 and prohibited from carrying out any regulated activities because he is "not a fit and proper person in terms of a lack of integrity and a lack of competence and capability".
Meanwhile, the another director, Stephen Hocking, has been prohibited for the same reason, although he avoided a penalty of £25,000 by proving this would cause "serious financial hardship".
As a result of these planned enforcement actions, the FSA concluded Pave would not have adequate human resources to continue operating it, and has therefore decided to cancel its permissions.
The regulator said Pattison "closed his mind to the risks associated with advising Pave's customers to invest so heavily in UCIS", leading to at least 65 clients putting their money into such products.
In one case, Hocking increased the risk profile of a vulnerable elderly client and advised her to surrender six of her eight bonds totalling £885,000 and to re-invest the proceeds including a total of £680,200 into two UCIS funds.
The FSA concluded both would pose a "serious risk to consumers" if they were allowed to continue carrying out regulated activities.
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Letter from the frontline
Breaching SEC rules
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