FSA fines director for not disclosing information about adviser
25th August 2009The Financial Services Authority (FSA) has fined Christopher Davies, director of Newquay Investment Services (2004) Limited, an IFA based in Cornwall, GBP17,500 for not disclosing to the FSA important information about an adviser Davies had employed at Newquay. This led to an unacceptable risk of customers being recommended unsuitable mortgages.
After Newquay had applied to the FSA last year for the adviser to be confirmed as an approved person, Davies became aware that the adviser's previous employer had suspended the adviser because of concerns about his business methods and ethics including apparently inflating income figures in mortgage applications. Davies raised these concerns with the adviser and concluded that the adviser had lied to him about why he had left his previous employment. Davies then failed to disclose this significantly adverse information to the FSA.
Despite being aware of the concerns of the adviser's previous employer and of the adviser misleading him on these matters Davies failed to:
- exercise appropriate control over mortgage applications submitted by the adviser;
- consider whether it was appropriate, in light of indications that the adviser was not fit and proper, to allow him to continue giving advice on life and other products; and
- understand the risks associated with 'fast track' mortgages and as a result allowed the adviser to submit mortgages of this type to lenders.
Margaret Cole, FSA director of enforcement at the FSA, said:
"Davies' failures exposed Newquay's customers to an unacceptable risk of being recommended mortgages which may not have been suitable for them and exposed lenders to the risk of offering mortgages on the basis of false or misleading information passed through Newquay.
"When Davies became aware of the later adverse information relating to the adviser he should have immediately informed the FSA. The fine indicates that the FSA takes a serious view of such failings and serves as a deterrent to directors of regulated firms from acting in a similar way."
Davies agreed to settle at an early stage of the FSA's investigation and therefore qualified for a 30 per cent discount under the FSA's executive settlement procedures. Had Davies not settled at this stage the FSA would have imposed a financial penalty of GBP25,000.
