Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Independent UK
The Independent UK
August Graham

Financial advisers fined £1m for advice which cost customers £50m

PA Wire

Five men will have to pay more than £1 million between them for “reprehensively” betraying the interests of customers who went to them for financial advice, the City watchdog has said.

A tribunal upheld the decision of the Financial Conduct Authority (FCA) to penalise the group of five, who were said to have cost pension savers about £50 million between them.

The five either acted dishonestly or recklessly when giving financial advice to more than 2,000 customers of their firms between 2013 and 2016, the tribunal found.

The customers had been referred to three financial advice firms by Hennessy Jones, a firm now known as Reditum Capital.

The FCA said that the three firms, which it regulates, broke rules by adopting a business model designed by Hennessy Jones, which was not authorised by the watchdog.

No reputable financial adviser should recommend that people put their entire pension savings in high-risk investments

Mark Steward, FCA

This model was intended to funnel the customers Hennessy Jones introduced to the three advice firms towards putting their pensions in high-risk investments that it stood to gain from.

There is no allegation of wrongdoing against Hennessy Jones.

“No reputable financial adviser should recommend that people put their entire pension savings in high-risk investments,” said Mark Steward, executive director of enforcement and market oversight at the FCA.

“Customers were misled into believing that they would get independent and impartial advice, but their interests were reprehensively betrayed in this case.

“This case also places firms’ relationships with unauthorised introducers in the spotlight.

“All firms should pay heed and scrutinise these relationships to ensure standards of integrity, due diligence and fair treatment of customers are uppermost.”

The tribunal said that three of the men had allowed their “instincts and values” to be overridden by a boom in business and the money that came in through the door.

The tribunal also upheld a ban on all five from engaging in activities regulated by the FCA.

The FCA said that the penalties are “very large” for the size of the financial advice companies that were involved.

This was due to the “scale of the shortcomings”, the watchdog said.

The 2,000 customers have been compensated by the Financial Services Compensation Scheme.

The PA news agency has tried to reach the men for comment.

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.