Sesame has agreed to pay a £1.5m fine after the FCA found it promoted its own commercial interests over its clients.
The Network’s “pay-to-play” scheme meant the range of products recommended to its clients under its restricted advice service was influenced by the amount of services Sesame had sold to product providers.
But while John Cowan, executive chairman of Sesame Bankhall Group, has accepted the network’s wrong-doing, he has defended the products on offer through the scheme.
He said: “We recognise that the arrival of the FCA’s retail distribution review introduced a step change in regulation and heralded a new relationship between product providers and distributors.
“As the market leader, we should have been more responsive to the wind of change blowing through our industry.
“The panel from which our members could select products was constructed on the wrong basis, but that did not make the panel wrong in itself.
“Those brands produce some of the best products around. The advisers can rest assured they didn’t give any bad advise as a result of this.
“We are now looking at the panel to see if it is still appropriate, but it is perfectly possible we come up with something similar.”
The providers who were part of Sesame’s “restricted advice” panel were Aegon, Aviva, Bright Grey, Friends Life, LV=, Partnership, Prudential, PruHealth, PruProtect, Scottish Life and Zurich.
Mr Cowan’s role as chairman was expanded in January when chief executive George Higginson left the company after four years at the firm.
His departure was part of a management shake-up at the company that also saw finance director Paul Hooper leave.
In January 2013 new rules were introduced as part of the RDR, which meant paying commission to advisers for selling a retail investment product was banned.
Tracey McDermott, director of enforcement and financial crime at the FCA, said: “Sesame’s approach to inducements, in the face of a clear position from the regulator, undermined the rules in order to look after its own interests.”
This is the fourth time the FCA – or its predecessor the FSA – has fined Sesame. It was most recently fined £6m in June 2013 for failing to ensure the advice given to customers was suitable.
Carl Melvin of Renfrewshire-based Affluent Financial Planning, said: “I think it is a real issue, particularly on the restricted side of things. Following the RDR we are meant to be in an environment of transparency and putting clients first.
“Unfortunately, it shows there is still a lot of work to be done, and some networks do not get it.”