The Financial Conduct Authority (FCA) has fined Sesame Limited £6,031,200 for failures in relation to Keydata advice.
Sesame failed to ensure that investment advice given to its customers was suitable; and failed in the systems and controls that governed the oversight of its appointed representatives (ARs), the FCA said.
The penalty is made up of a £245,000 fine for Sesame's advice failings in relation to Keydata life settlement products, and a £5,786,200 fine for systems and controls weaknesses across its investment advice business.
All of the failings relate to Sesame's oversight of its appointed representatives, which are individuals or firms that draw their authorisation from a principal (in this case, Sesame), with the principal ultimately accountable to the regulator for poor practice.
FCA director of enforcement and financial crime Tracey McDermott said: "Sesame is one of the largest and most well-known financial services networks in the UK responsible for the oversight of some 1,220 appointed representatives. It describes itself as ‘perfectly placed to deliver expert guidance and services' but the failings in this case fall far short of that. The weaknesses in Sesame's systems and controls show that there was an ongoing risk that unsuitable advice could be given by Sesame's appointed representatives.
"By allowing appointed representatives to use their regulatory permission to operate, principals are effectively vouching for them. Therefore they must keep a close eye on what their appointed representatives do and keep them up to date with the regulator's expectations. Critically, they must also act decisively when things go wrong. Sesame failed on all of these counts."
Sesame agreed to settle the case at an early stage of the investigation and therefore qualified for a 30% discount. Without the discount the fine would have been £8,616,000, the FCA said.
Sesame Bankhall Group chief executive officer George Higginson said: "We regret these past issues and, in co-operation with the FCA, we have undertaken an immediate past business review to ensure that any customers who received unsuitable advice on Keydata Products have been compensated.
"Through our multi-million pound investment in technology and improved systems and control framework, which includes the move to full file checking, we are working hard to ensure lessons are learnt and corrective actions implemented. The launch of our business change programme last September, with technology at its core, is already delivering tangible benefits and demonstrates our determination to continually strengthen our systems and controls.
"The executive team and I are fully committed to ensuring our advisers are delivering the right customer outcomes that can be clearly evidenced. This commitment is fully endorsed by the SBG board. We have a long-term commitment to professional financial advice and I firmly believe the actions we are taking will put Sesame, our members and the consumers they serve in a stronger position moving forward."
Caring for children and elderly relatives
Similar to June 2007
Square Mile’s series of informal interviews
Fine reduced to £60,000
Two roles created