The firms, Financial Limited and Investments Limited, failed to ensure that their ARs and individual advisers were adequately supervised and controlled to minimise the risk of mis-selling and the provision of unsuitable advice to consumers.
Networks play an important role in financial services and it is critical that they have access to quality management information and risk-focussed systems and controls so that they can effectively discharge their responsibility to ensure that consumers get proper advice from their ARs. The punitive sanction is intended to have a financial impact on the Group, which generates revenue from its ARs by way of fixed fees. The ban is intended to deter the firms and other similar network firms in the market from committing similar breaches.
Tracey McDermott, the FCA’s director of Enforcement and Financial crime, said:
"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. 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.
"The FCA’s disciplinary action in this case reinforces the importance of collating quality MI, embedding risk-focused systems and controls and encouraging a consumer-focused culture."
