Further blow for Financial Ltd after FCA recruitment ban

NatWest has announced that it is no longer accepting new mortgage applications from appointed representatives (ARs) of financial advisory network Financial Ltd.

This action has been taken by the bank as a result of the fact that, in July 2013, Financial Ltd, and its sister network Investments Ltd, were banned by the financial regulator, the Financial Conduct Authority (FCA), from recruiting new ARs for four months. This was the first time that the FCA had imposed this sanction on a firm.

Clearly NatWest believes that business submitted by Financial Ltd could pose an undue risk as a result of the issues identified by the FCA.

NatWest will however continue to process applications that have already been submitted, and will also accept applications from former Financial Ltd ARs who are now authorised elsewhere in the industry.

A NatWest spokesperson justified the move by saying: “As a responsible lender we take seriously the findings of the FCA and will undertake a full review of Financial Limited. Until we have completed this our decision is final and is not open to negotiation.”

But Financial Ltd chief executive Brian Galvin said: “There is no good reason for this suspension and we are working with NatWest to get it lifted.” He added that no other provider had taken this step, and that his members had not received any notice of NatWest’s action.

It remains to be seen whether any other providers will take this action in due course, whether with Financial Ltd or any other firm who have been subject to FCA action.

The failings identified by the FCA at Financial Ltd were wide-ranging, encompassing recruitment, training, supervision, file reviews and risk management; and continued over a five-year period. In summary, the regulator said that the firms treated their ARs as the end customers, rather than the clients they were servicing. Many of the products the ARs advised on were higher risk, such as unregulated collective investment schemes (UCIS), pension transfers and pension switches. ­

The FCA has also ordered Financial Ltd to conduct a historic review of its pension switch and UCIS business, and to pay compensation to affected clients.