The Financial Conduct Authority (FCA) sent out an important message this week with the fine for Bluefin Financial Services for pushing its parent company's products while claiming to be independent.
Clearly, the price for pretending you are independent when you are not runs into six figures.
On Wednesday (6 December) Bluefin Insurance Services Limited was hit with a £4m penalty for a policy focused on increasing the business placed with its parent company over treating customers fairly.
An FCA investigation found Bluefin failed to provide information to its customers about its independence in a way that was clear, fair and not misleading.
Between 9 March 2011 and 31 December 2014 Bluefin, which at this time was owned by Axa UK, held itself out to be "truly independent" in the advice it provided and the insurers it recommended to clients.
But it failed to implement adequate systems and controls to manage the conflict that arose from its ownership.
If you don’t do what you say on the tin, the regulator is right to hit you where it hurts. Bluefin brokers did not disclose the policy of increasing the business it placed with its parent company and the FCA said customers risked being misled into believing they were dealing with a broker who would conduct an unbiased search of the market.
Bluefin was sold by Axa on 31 December 2016 and is no longer owned by an insurance company.
The FCA had no criticism for Axa UK.
The label “independent” is so important and I am pleased to see the FCA take action over the misuse of the term.
Independent means free from outside control and not to be subject to another's authority.
It is a label that needs protecting and is rightly held as a gold standard of advice.
Many independent financial advisers over the years have been frustrated by tied and multi-tied intermediaries or networks pushing their provider owner’s products.
Clearly Bluefin is not the only advice business guilty of this.
A simple look at multi-tied product panels of some multiple provider owned now defunct networks that claimed to be “independent” used to raise eyebrows among the Financial Adviser news team back in the early 2000s.
So, I would request more fines and action along the same lines please from the FCA.
It is no more acceptable for a financial adviser to mislabel their services as independent when they are not than it would be for you to order a nut free dessert at a restaurant and end up in hospital after eating it because it was full of nuts.
If you don’t do what you say on the tin, the regulator is right to hit you where it hurts with a massive financial penalty.
As Mark Steward, executive director of enforcement and market oversight at the FCA, said: "It is also unacceptable that firms hold themselves out as independent when they are not."
emma.hughes@ft.com
