FSA takes drastic action against repeat offender stockbroker

FSA takes drastic action against repeat offender stockbroker


The FSA has censured London based stockbroking firm, Wills & Co, for poor sales practices and not monitoring its advisers properly – this is despite a fine and a previous requirement to take remedial action.

It was also found that Wills & Co failed to handle its customer complaints properly.

The FSA has also stopped Wills & Co from giving investment advice and it is required to write to all its customers to confirm this change.

Wills & Co would have been fined £1.5 million had it not been in the process of winding down its business and had a large amount of customer redress due. 

In October 2007, the FSA fined Wills & Co £49,000 for giving poor risk warnings and misleading information to its high risk penny share customers. It was also required to correct the failings identified with its sales and compliance practices. Two months later, Wills & Co told the FSA that the necessary changes had been made.

However, when the FSA conducted a visit to Wills & Co, it found the same failings. As a result, the FSA undertook a review of transactions and identified failings in all transactions and the risk that the customers may have been given unsuitable advice.

In order to protect consumers, the FSA required Wills & Co to engage an external consultant to retrain and monitor its advisers and then stopped it providing investment advice.

Margaret Cole, FSA director of enforcement, said: “It is shocking that despite previous action, Wills & Co still failed to put its customers’ interests first. The FSA has made no secret of the fact that it expects higher standards of customer treatment in the stockbroking sector. What makes this case particularly serious is that the firm was fined by the FSA and promised the FSA that its treatment of customers had improved when that was plainly not the case. This is unacceptable and justifies the action we have taken against the firm and its directors.” 

The FSA has also issued statements of misconduct against Darren Lansdown, Wills & Co’s sales director, and Katharine Prichard, its compliance director for failing to ensure that Wills & Co’s business was run in compliance with regulatory requirements.

In particular, they did not make sure that changes to Wills & Co’s compliance monitoring and sales practices were sufficient to correct the failings identified by the FSA. 

Both directors have signed undertakings not to hold senior management functions in the financial services industry for 3 and 5 years respectively.

Margaret Cole added: “Directors must take their duty to meet our regulatory standards seriously or face the consequences. It is down to a firm’s directors to set its culture and approach so that customers are treated fairly and in this instance, Lansdown and Prichard failed in their responsibilities.”

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