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FCA bans founding partners of advice firm

12th October 2017
"The Chiesas misled their creditors, especially the FSCS, in a calculated way. Their misconduct demonstrates a serious lack of integrity."

The FCA has banned a married couple from working in financial services and fined them £50,000 for 'integrity failings' after they attempted to mislead the FCA during an interview.

Colette and John Chiesa were founding partners of Westwood Independent Financial Planners, which was authorised by the FCA to provide personal investment advice.

Following action taken by the FCA in May 2011 over mis-selling of geared traded endowment policies (GTEP products), Westwood became insolvent and went into sequestration, the term used in Scotland to describe bankruptcy.

Westwood, and therefore Mr and Mrs Chiesa as partners with unlimited liability in Westwood, had significant liabilities arising from numerous valid claims filed with the Financial Ombudsman Service relating to the advice offered on GTEP sales.

In late 2011, a Trustee was appointed to establish the value of the Chiesas’ assets and liabilities, so an assessment could be made which would allow them to pay creditors.  

The FCA says the couple then 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.

The pair failed to disclose their continued beneficial interest in an unregulated company that was capable of paying over £1 million per year into an off-shore remuneration trust for their benefit.

This trust paid a total of approximately £2.6 million between April 2012 and December 2014, at an average of over £84,000 per month. The payments were in the form of loans which, in the FCA’s view, were never intended to be repaid.

The Chiesas also failed to disclose that the unregulated company regularly paid significant personal and living expenses on their behalf, including rent on a London address of around £5,000 per month.

The FCA investigation found that Mrs Chiesa was spending on average £6,000 per month on clothing, jewellery, interior design, cosmetic dental treatment, travel and her Porsche car, as well as £12,000 per month on flying lessons, tennis tickets, football tickets and club membership.

During the sequestration process the couple each paid only £200 per month towards their creditors.

Customers who lost significant sums due to Westwood’s mis-selling received compensation from the FSCS. By late 2016 the FSCS had paid out over £3.8 million. Westwood’s liabilities to these customers were therefore borne by the financial services industry.

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."

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