A Hertfordshire-based financial advice firm has been fined £20,000 by the FCA for misconduct relating to the sale of Keydata products.
John Joseph Financial Services, based in Borehamwood, recommended Keydata products to 29 customers in two periods, between August 2005 and June 2006 and between November 2008 and December 2008.
The total amount invested by JJFS’s customers was £6.1m, from which the advisory firm generated a total of £296,937.81 in commission.
A final notice issued by the FCA said JJFS “failed to properly recognise the risks arising from lack of diversification of investments in a customer’s investment portfolio”.
It also said: “Many of JJFS’s customers were approaching or already in retirement and therefore faced greater difficulties in rebuilding their investment portfolios in the event of loss of capital or income.
“The systemic weaknesses across JJFS’s systems and controls relating to the sales process for Keydata products affected all aspects of the sales process, including fact finding, advising, disclosure of risks, and recording and monitoring of sales, much of which went to the heart of the client/adviser relationship.”
JJFS settled early during the FCA’s investigation, so was given a 20 per cent discount on its fine.
Background box
The Keydata products were based on investments in corporate bonds which were issued by special purpose vehicles incorporated in Luxembourg.
The funds raised through the issue of the bonds were then invested in a portfolio of US life insurance policies and cash.
In June 2009, Keydata was placed into administration on the FCA’s application, on the basis that it was insolvent.
Keydata was dissolved on 2 July 2014.
