FSA bans compliance director of collapsed Glasgow IFA
Action over pension transfers would have resulted in fine but director provided proof of potential financial hardship.
The Financial Services Authority has issued a public censure of failed IFA firm City Gate Money Managers and banned its director and compliance officer Stewart Domke from holding any significant influence functions in the future over unauthorised pension transfers.
In a statement the regulator said it would have imposed financial penalties of £180,000 on City Gate and £70,000 on Mr Domke, but that it had waived both as the firm is in liquidation and Mr Domke provided “evidence to show that a fine would cause him serious financial hardship”.
The watchdog said it had taken the action as Glasgow-based City Gate had advised on pension transfer and income drawdown business when it did not have permission to do so and had produced a financial promotion that did not comply with FSA rules and could have misled potential investors.
It added that City Gate failed to have adequate systems and controls in place to monitor and oversee its advisers and appointed representatives.
This is the second time that the FSA has taken action against City Gate. In July 2009, the FSA fined City Gate £42,000 for systems and controls failings around the approval of financial promotions and inadequate monitoring of appointed representatives.
That action followed a combined fine of more than £70,000 issued to two directors of Yorkshire-based financial group Bridford over misleading promotions and mismanagement of an investment scheme which put customers at “serious risk” of losing nearly £10m.
City Gate was fined for approving financial promotions issued by the appointed representative run by the pair that were designed to encourage investment in the scheme.
The FSA found that Domke failed to address the failures identified by the FSA’s first action against City Gate and ensure the firm only performed the regulated activities that it was authorised to perform.
Bill Sillett, head of retail enforcement at the FSA, said: “City Gate is a repeat offender. It is rare that the FSA has to take action against a firm more than once, but City Gate’s systems and controls remained poor despite our first enforcement action.
“City Gate failed to take adequate steps to address the failings we identified. The fact that City Gate provided advice it did not have permission to give is inexcusable. It seriously aggravated the case against the firm.
“As a director and compliance officer, Domke had the opportunity to improve compliance at City Gate but failed to do so, leaving in place inadequate systems and controls and failing to monitor or check City Gate’s appointed representatives.”