The regulator is yet to reveal the identity of the two advisers as usually, names of individuals and firms are revealed in a decision or final notice.
In this case, both individuals work for the same advice firm as independent financial advisers. One (‘Individual A’) is a director of this firm, while the other (‘Individual B’) is also the director at a second advice firm.
The FCA said Individual A’s conduct “amounts to a failure to comply with regulatory requirements aimed at ensuring that customers received suitable advice and were treated fairly”.
The regulator said Individual A “dishonestly” arranged to receive “prohibited commission payments” derived from investments made by his advice firms’ customers, both for himself and other advisers.
Payments were “funnelled via companies connected to the individual and intentionally designed to disguise their true origins”.
The FCA said he also “concealed” a conflict of interest that was “at the heart” of his firm’s business model so that he, and the other advisers, could receive the prohibited commission payments.
He has also been levelled with advising his firm’s customers to invest in high-risk, illiquid investments and made “misleading statements” in application forms about the customers.
As well as with persuading his customers to transfer out of the British Steel Pension Scheme “despite knowing it was not in their best interests”, the FCA said the adviser created suitability reports suggesting the advice was to stay in the scheme to disguise the true nature of the advice.
Exit fees were withheld from Individual A’s customers, the FCA said, and in his capacity as director, the adviser allowed two people to provide pensions advice to his customers without being approved persons.
The FCA said this was “recklessly disregarding the risk to those customers’ interests”, and that the adviser in question misled the FCA about it, along with the prohibited commission payments.
As for the second adviser, ‘Individual B’, the FCA said his conduct amounted to the same overall failure as the first adviser.
Specifically, the regulator said he also “dishonestly” received prohibited commissions payments derived from investments made by Firm A’s customers.
That he “recklessly ignored” the risks of high-risk, illiquid investments when advising his customers, and “dishonestly sought to mislead” the FCA about the second advice firm’s role in arranging and/or advising customers to invest in high-risk investments.
Individual B was also levelled with allowing his second firm to receive ongoing service fees and trail commission from his customers without their knowledge, consent or actually providing any ongoing service.
These advisers now have the right to make representations to the FCA’s Regulatory Decisions Committee which will decide on what action to take and whether to issue a decision notice.
If a decision notice is issued, the advisers have the right to refer the matter to the Upper Tribunal which would reach an independent decision on action for the FCA to take, if any.
ruby.hinchliffe@ft.com
