Regulation  

FCA bans two financial advisers and issues £885k fines

The Financial Conduct Authority has fined two Surrey-based investment advisers a total of £885,000 and banned them from holding any position at a financial firm.

Mark Bentley-Leek and Mustafa Dervish, who were both directors of Bentley Leek Financial Management, were found by the regulator to have lacked integrity and to have misled clients about how investments they recommended were affected by the economic downturn.

The FCA has also cancelled the permissions of Bentley-Leek Financial Management, which is now in liquidation.

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Between 5 March 2004 and 23 November 2010 Bentley-Leek and Dervish advised more than 300 customers to invest more than £35m in a series of property developments in the UK and abroad.

Despite the riskiness of the investments they were selling, the pair told some of their clients that their money and a 6 per cent to 18 per cent return on the investment was guaranteed. Some investors were told that returns of up to 50 per cent could be expected.

The duo also failed to adequately inform investors that they were directors and owners of some of the property development companies they were advising clients to invest in, which created a conflict of interest, the FCA said.

By June 2009, both men were aware the property investment companies were in difficulty, with the market falling and bank lending seizing up.

The City watchdog said despite that they continued to advise clients to invest.

Within 17 months, however, Bentley Leek Financial Management was in administration and had entered insolvency by November 2011.

Despite the promise of guaranteed returns, most of those who invested during this period are likely to suffer substantial losses.

The Financial Services Compensation Scheme (FSCS) is currently considering whether those affected may be entitled to some compensation.

Tracey McDermott, director of enforcement and financial crime at the FCA, said: “Many consumers committed their life savings or their pensions to these property investments as they trusted Mr Bentley-Leek and Mr Dervish’s advice.

“The least consumers should expect from those they turn to for investment advice is honesty and integrity. Bentley-Leek and Dervish fell far short of our expectations, they failed their customers and further tarnished the name of the financial services industry.

“We are determined to stamp out such behaviour and these sanctions should send a clear message to others who might be tempted to put their own interests ahead of those of their clients.”

Mr Bentley-Leek and Mr Dervish have been fined £525,000 and £360,000 respectively. The fines would have been £750,000 and £450,000 respectively had the two not settled at an early stage of the authority’s investigation.