Is RDR faking King just the tip of the iceberg?

Donia O’Loughlin

One of the most interesting news stories that featured on FTAdviser this week is the regulator banning and issuing a fine to an adviser who faked their statement of professional standing to show he was qualified under the Retail Distribution Review.

Sheffield-based Ewan King, a former Intrinsic authorised representative, has been banned and fined £19,900 by the Financial Conduct Authority. He is the first adviser to be banned by the FCA for fabricating his SPS, the regulator said in a statement.

I am willing to bet Mr King is one of many advisers who have faked their qualifications. At first glance, I thought the fine was far too hefty for his crime, but the level of the fine will no doubt deter other advisers from considering faking qualifications.

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The watchdog said Intrinsic was not aware that he had faked his SPS and that Mr King had “led the firm to believe” he had a certificate issued by the Chartered Insurance Institute.

The FCA itself only found out about it when it asked the CII itself, which responded simply that he had not applied for or been issued with a statement because he had not reached the right level of qualification.

As several adviser said in the inevitable debate following the story breaking, surely we need to have more robust systems in place to check these things than simply relying on the word of the adviser.

Every industry has its bad eggs: if it was this easy to game the system, then I don’t doubt we’ll find more of these cases coming to light in the coming months.

Sesame not open for non-mainstream advisers

Sesame announced this week at its symposium - which journalists were prohibited from attending - that it will no longer be “an appropriate home” for advisers who deal with non-mainstream investment areas as it carries too much risk.

It looks like Sesame learnt a hard lesson when the regulator issued it with a £6m fine, which was £2m above its profit for 2012, for failing to ensure the advice it gave was suitable on Keydata recommendations and over broader systems and controls weaknesses.

At the event, Stephen Gazard, Sesame Bankhall Group managing director, said it will become increasingly difficult for a large business which supports thousands of different business models to support all the various potential independent investment propositions, “particularly those that include the ability to advise on non-mainstream investments”.

On the network front, Openwork operates a restricted model as does Personal Touch Financial Services, which are largely mortgage-led but does have advisers that deal with investments. Positive Solutions, Intrinsic, Tenet and Financial Ltd all boast of supporting independent networks, but Sesame is betting this won’t last forever.

FCA is not ahead of the game

The FCA has once again closed the stable door after the horse has bolted in its announcement that it will be running RDR workshops.

A FCA spokesperson confirmed to FTAdviser that although the programme is still being worked out, topics will include independent and restricted propositions as well as disclosure.