Husband and wife financial advisers Mrs Colette Chiesa and Mr John Chiesa have been prohibited from working in financial services by the Financial Conduct Authority (FCA) after displaying a lack of integrity. The couple failed to disclose the lavish lifestyle that they continued to lead during and after bankruptcy proceedings, while the entire industry was forced to foot the bill for their past misconduct. Mrs Chiesa has also been fined £50,000 after she was found to have misled the regulator during an interview.
Mr and Mrs Chiesa together controlled advisory firm Westwood Independent Financial Planners. In May 2011, Westwood was fined £100,000 by the previous regulator, the Financial Services Authority, over its mis-selling of Geared Traded Endowment Products (GTEPs). The firm advised a number of customers with low risk tolerances to invest in these high-risk products. This fine was confirmed in November 2013, after the firm unsuccessfully appealed to the Tribunal.
Westwood however had already been declared insolvent prior to the end of 2011, and went into sequestration, the Scottish term for bankruptcy.
A Trustee was duly appointed to establish the value of the Chiesas’ assets and liabilities. However, the FCA says that Mr and Mrs Chiesa made “inadequate, incomplete and misleading disclosures to their Trustee about their financial situation during their sequestration, in order to avoid the Trustee inquiring into, and potentially recovering, assets for the benefit of their creditors.”
Examples of matters the Chiesas failed to disclose include:
- Their interest in an unregulated company that could provide them with income of up to £1 million per year via an offshore trust.
- That this unregulated company regularly paid significant personal and living expenses on their behalf. As a result, they were able to pay rent of £5,000 per month on a London property, and Mrs Chiesa could spend an average of £6,000 per month on luxuries, while Mr Chiesa was spending on average £12,000 per month. They were thus able to maintain a lifestyle that included cosmetic dental treatment, a Porsche car and flying lessons.
All the while Mr and Mrs Chiesa were paying only £200 per month towards their creditors, and the customers who were victims of their mis-selling of GTEPs were forced to turn to the Financial Services Compensation Scheme (FSCS). By late 2016 the FSCS had paid out over £3.8 million – sums which were paid by all regulated firms via their FSCS levies.
The FCA thus felt it had no option but to impose the ultimate sanction on both Mr and Mrs Chiesa – a complete ban on working anywhere in the financial services sector.
The additional fine on Mrs Chiesa was imposed as she tried to give the FCA the false impression that she lacked knowledge of the firm’s financial arrangements, when in fact she held a key role at Westwood. She also attempted to mislead the regulator about her failure to disclose her ownership of valuable jewellery.
The Chiesas initially attempted to have these prohibition orders struck out by the Tribunal as well, but opted to withdraw their references to the Tribunal in September 2017.
Mark Steward, Executive Director of Enforcement and Market Oversight, said:
“The Chiesas misled their creditors, especially the FSCS, in a calculated way. Their misconduct demonstrates a serious lack of integrity.”
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.