FCA strips advisor boss of permission

As well as issuing a substantial fine, the FCA has banned an advisor boss from performing a certain regulated function.

The regulator sanctioned Stephen Edward Bell of 16 Toftdale Green, Lyppard Bourne, Worcestershire, after he designed and implemented systems and controls at an adviser network and was found to be knowingly aware of certain in-house breaches.  

Between 20 August 2008 and 16 January 2013, Mr Bell was responsible for compliance matters at Financial Limited and Investments Limited, which formed to create an adviser network. The two also acted as subsidiary companies of holding firm - Standard Financial Group Ltd.

Financial Limited is responsible for around 250 Appointed Representatives (ARs) and 300 Registered Individuals (RIs) while Investment Limited is responsible for four ARs and six RIs. (15) Both firms hold permissions which allow their ARs and RIs to advise customers on mortgages and pensions. (16)

The watchdog found that Mr Bell failed to take sufficient steps to assess prospective ARs’ business models, carry out suitable assessments on RIs before they began advising clients and failed to effectively supervise ARs and RIs at all times. (8)

The regulator acknowledged that Mr Bell took significant steps to introduce and improve the firms’ compliance systems but these were insufficient in complying with regulations. (7)

His failings were found to have exposed customers to risks that the firms’ ARs and RIs would make personal recommendations which were unsuitable. (9)

As a result, last week the regulator has deemed that Mr Bell is not fit and proper to perform compliance oversight functions in relation to any regulated activity.

In addition to this, as Mr Bell agreed to settle at an early stage, he qualified for a 30 per cent discount on his financial sanction, saving him from the initial penalty of £48,389.

 FCA’s Director of Enforcement and Market Oversight, Georgina Philippou, feels this punishment illustrates how important a Compliance Director is to a firm.

“We view Mr Bell’s failings as particularly serious because he had been put on notice of the need for significant improvements in the firms’ systems and controls and compliance,” said Georgina.

“The network model is undermined if the senior managers of the principle firm do not carry out their responsibilities.”

Last July, the regulator restricted the two firms from appointing any ARs or RIs for a period of 126 days. This was after the FCA concluded that the pair posed a high risk of consumer detriment with its advisers making unsuitable personal recommendations to clients.