Tribunal approves £100,000 fine for endowment advice

In a 48-page judgement issued on 22 November, the tribunal stated that Westwood had breached conduct of business rules by failing to “pay due regard” to how it communicated the “high risk” nature of GTEPs.

The tribunal heard from five witnesses who had been sold GTEPs by the firm, including a teacher married to a self-employed writer who took out an unnecessarily large mortgage to buy the product at the behest of Westwood.

The tribunal concluded that three of the witnesses did not have a proper grasp of how the products worked at the time they invested. It also found that the products were “plainly unsuitable” for two of the clients.

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Judge Greg Sinfield stated: “We note that Westwood made £509,123 commission from the sale of 50 GTEPs during the relevant period... we take the view that a penalty of £100,000 or more is a significant amount and would be an effective deterrent to others.”

A decision notice was issued by the FSA against Westwood on 31 May 2011. The firm referred the matter to the tribunal in an appeal on 23 June 2011. The firm was placed in sequestration – bankruptcy – shortly afterwards on 18 October 2011.