Charles Palmer, the majority shareholder and chief executive of Standard Financial Group; and director and de facto CEO of its main subsidiary Financial Ltd, has vowed to fight the fine and ban imposed on him by the Financial Conduct Authority (FCA) by appealing to the Upper Tribunal.
In their Decision Notice, the FCA gives details of its intention to fine Mr Palmer £86,691, and ban him from holding any significant influence function in the future, over issues regarding the suitability of advice given by the group’s appointed representatives (ARs). Standard Financial Group had two network subsidiaries – Financial Ltd and Investments Ltd.
40,000 clients are said to have been exposed to “significant risk” as a result of the group’s failure to ensure the ARs were adequately supervised, and that the suitability of their advice was adequately monitored. Many clients were advised to invest into high risk Unregulated Collective Investment Schemes (UCIS).
The group is conducting its own review of its past UCIS business, and as of July 16 2015, 94% of cases reviewed had been found to involve potentially unsuitable advice.
Mr Palmer commented:
“After all the time and money spent on this FCA investigation of Financial Ltd there was just one single allegation of substance against me.”
Whatever the outcome of the appeal, this case highlights the need for principals to ensure they adequately monitor their ARs, and also highlights how the FCA can take action against individuals as well as their firms.
Principals can always expect to be held accountable for the actions of their ARs, and need to impose strict rules on how they can conduct business. Yet in this case, the FCA says the group’s ARs were allowed “a high level of flexibility and freedom as to how they could operate.” They were allowed to use their own fact finds, customer risk profilers and research systems, and the ARs were not required to seek the approval of the group’s compliance function before using documents of their own design.
According to research by law firm RPC, 51% of the FCA’s fines in 2015 were levied against individuals.
Back in 2010, Mr Palmer accepted a £49,000 fine from the FCA’s predecessor, the Financial Services Authority, for failing to ensure that Financial Ltd’s advisers gave suitable advice on pension switch transactions. However, the latest fine relates to the period between February 2010 and December 2012.
In 2014, the FCA punished Financial Ltd and Investments Ltd by prohibiting them from taking on new ARs for a period of 126 days. The FCA found numerous issues with the group’s recruitment, training, supervision and file checking of its ARs. These failings also led to the compliance director Stephen Bell being banned and fined £33,800.
The FCA has now also fined the group’s former risk director, Paivi Grigg, the sum of £14,807 for risk management failings. However. Ms Grigg does not intend to appeal.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.