Compliance

FCA Slaps Recruitment Ban On The Financial Group

Mark Shapland, Reporter, London, 24 July 2014

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The Financial Conduct Authority (FCA) has placed a recruitment ban on two of The Financial Group’s subsidiaries after it failed to supervise and control the risk of mis-selling and the provision of unsuitable advice to consumers.

The Financial Conduct Authority (FCA) has placed a recruitment ban on two of The Financial Group’s subsidiaries after it failed to supervise and control the risk of mis-selling and unsuitable advice to consumers.

It is the first time the FCA has used its suspension powers and means Financial Limited and Investments Limited cannot hire new appointed representatives or individual advisers for a period of four and a half months.

The advisory firm escaped a £13 million ($22.1 million) fine due to its it financial position.

The regulator said that between 20 August 2008 and 30 April 2013 there were systemic weaknesses in the design and execution of the firm's systems, controls and risk management framework.

According to the FCA the culture at the firm was to blame, saying it viewed its ARs and individual advisers as the end consumer. The firm's network was responsible for 400 ARs and 500 individual advisers who gave advice to over 60,000 customers.

It was referred to the FCA's Enforcement Division following a risk assessment in May 2012.

"This is the first time the FCA has used its suspension or restriction powers to punish a firm for serious misconduct. In this case, it is a direct intervention by the FCA in the way the firm runs its business," Tracey McDermott, the FCA's director of enforcement and financial crime, said.

"The sanction is intended to send a message of deterrence to the rest of the industry, and serve as a reminder that the FCA takes systems and controls failings very seriously and is able to respond with sanctions that target the specific revenue streams of different types of business."

Chief executive Charles Palmer was the subject of a previous final notice in 2010 relating to earlier failings at Financial and Investments.

According to the company website its motto is “Humility, Integrity and Discipline" adding that "this guides us in the provision of compliance support and the necessary FCA regulatory licenses that advisers need in order to comply with the Financial Services and Markets Act 2000.”

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