A four-man IFA firm has been fined £14,000 by the FSA after recommending clients ditch segments of their offshore investment bonds and reinvest in new bonds.
The company made almost £100,000 commission as a result of the reinvestments but the FSA makes clear it found “no evidence” of deliberate behaviour by the firm.
According to the regulator, the actions of Kent-based adviser Henry Neil, of HNL, put 13 customers at risk of buying unsuitable investment bonds.
Interestingly, 22 cases in total were identified, but the remaining nine were, according to the FSA, as a result of “advice” given by that customer’s solicitor or accountant.
HNL has appointed an external compliance consultant to conduct a review of investment products sold between 10 June 2005 and 31 December 2007 and has been told it must compensate any customers who may have suffered loss.
“This fine puts investment advisory firms on clear notice that they must have the right arrangements in place to ensure that suitable advice is given and recorded,” FSA enforcement director Margaret Cole says.
“When making an investment recommendation, firms must ensure that customers have all the necessary information to decide whether the recommendation is right for them. This includes information about relevant costs and charges.
“Where firms cannot demonstrate this, we will take action which will include imposing disciplinary sanctions where appropriate.”
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