Majority shareholder and chief executive of Standard Financial Group Charles Palmer, and a director and de facto chief executive of Financial Limited, has referred a decision made by the Financial Conduct Authority to the upper tribunal.
Today (11 December) the FCA said it is of the view that, betwen 24 February 2010 and 20 December 2012, Mr Palmer failed to take adequate steps to ensure the firm’s appointed representatives and individual advisers who had approval to perform the CF30 (customer function) would give suitable advice to about 40,000 customers.
The FCA is seeking to fine Mr Palmer £86,691.
However, Mr Palmer disputes the FCA’s view and has referred the matter to the tribunal.
The FCA said that accordingly, the decision notice has no effect pending the determination by the tribunal.
In its decision notice, the FCA said Mr Palmer failed to exercise due skill, care and diligence in managing the business of the firms for which he was responsible.
The watchdog said Mr Palmer failed to take adequate steps to ensure that the risks in respect of underlying customers which arose from the business model that he had developed were being effectively managed by the firms.
The FCA stated he and the board were aware of and understood the risks, and that he and the board received sufficient, relevant and reliable information to control or mitigate those risks.
The FCA said it considers Mr Palmer’s failing to be particularly serious for a number of reasons, including the fact that it has taken enforcement action against him in the past for breaching his responsibilites as a director.
He had been put on notice of the need for the fair treatment of underlying customers to be central to the firms’ business, and to control effectively the firms’ ARs and registered individuals in order to ensure they are treated fairly in a number of ways.
The FCA said that as an adviser network business, the firm is responsible for the fair treatment of underlying customers by their ARs and RIs.
The tribunal may uphold, vary or cancel the FCA’s decision.
In February this year, Tavistock Investments shareholders voted unanimously in favour of its acquisition of Standard Financial Group.
The decision was made at a meeting of shareholders on 12 February, held after the proposed buyout of the holding company of advice network Financial Limited was announced in January.
In addition to the £2.7m raised by Tavistock to provide regulatory and working capital through a placing and subscription, the directors of the adviser consolidator said it raised an extra £355,856 from its existing shareholders in line with the one-for-four open offer announced in January.
In October this year, Tavistock Investments confirmed the closure of Financial Ltd and Investments Ltd, the two trading subsidiaries it bought during the deal for Standard Financial Group in February.
ruth.gillbe@ft.com
