A third director of advisory firm Tailormade Independent has been banned from holding senior positions in financial services, also receiving a £165,900 fine from the Financial Conduct Authority.
The regulator found that Robert Shaw failed to ensure that Tailormade assessed the suitability of investments made through self-invested personal pensions for its customers, and failed to ensure that the firm identified and managed its conflicts of interests.
Tailormade provided advice to customers on transferring their existing pension funds into unregulated investments such as green oil, biofuels, farmland and overseas property - including Harlequin - via Sipps.
Between 2010 and 2013, 1,661 customers invested £112m in these investment products, many of which were not typically permitted by their existing pension schemes.
The FCA found that Mr Shaw “benefitted financially” from being the director and shareholder of Tailormade Alternative Investments, an unregulated introducer, which referred clients to TMI.
The final notice said that the financial benefit he received created a conflict of interest with his duty to TMI’s customers to run the business compliantly. “These payments created a conflict of interest and so should have been identified, and then disclosed to customers. However, no adequate disclosure was made.”
According to the regulator, the issue was compounded by Mr Shaw’s failure to act when TMI’s external compliance consultants warned it of the need to consider and disclose conflicts of interest to customers.
As a director with responsibility for the management and oversight of TMI, Mr Shaw should have ensured that TMI considered the suitability of the investment products for customers but “failed to do so”.
Tailormade went into liquidation in October 2013. Prior to this, the Financial Services Authority imposed a restriction on new pension business.
Georgina Philippou, acting director of enforcement and market oversight at the FCA, commented that Mr Shaw exposed customers to risky investments without considering if these products would meet their needs.
“In addition, he personally benefitted from sales of these products without revealing to customers the full extent of the benefits he received. His actions mean that many customers faced losing all of their hard earned pension funds.”
Earlier this year, the FCA found Tailormade directors Lloyd Pope and Peter Legerton had failed to ensure TMI assessed the suitability of investments made through Sipps for its customers, failed to ensure the firm identified and managed its conflicts of interests and failed to oversee properly its compliance function.
Mr Pope was fined £93,800 while Mr Legerton would have been fined £84,000, but for financial hardship.
donia.o’loughlin@ft.com
