RSM Tenon Financial Services Limited have been fined £700,000 by the FSA for failings in its advice and sales processes for Lehman-backed structured products. The FSA also found there were failings in preventing unsuitable advice on structured product and pension switching.
Further to this fine, Tenon will also have to buy back any products from customers who who received unsuitable advice and reimburse them for the amount originally invested plus interest.
This is the first enforcement action resulting from the FSA’s review of the marketing and distribution of structured products concluded in October 2009.
The FSA found that, in relation to its sales of Lehman-backed structured products between November 2007 and August 2008, Tenon failed to treat some of its customers fairly and failed to fully and correctly assess the risks of structured products. They failed to ensure advisers considered those risks when providing advice to customers.
More suprisingly for this compliance consultancy, Tenon
- failed to provide suitable advice to its customers
- failed to demonstrate the suitability of its advice by recording insufficient personal and financial information on customers’ files
- failed to implement and maintain appropriate compliance monitoring to control the use of non-compliant direct offer financial promotions.
Whilst a lot of on-lookers will say it was a failing of a big player who thought they were bigger than the FSA, the more important fundamental errors of suitability, insufficient KYC and basic financial promotions rules being flouted are even more worrying.
FSA director of enforcement and financial crime Margaret Cole says: “We take failure in this area very seriously and the fine and other actions announced today demonstrate our commitment to credible deterrence.
“This is the first action we have taken for advice failings relating to Lehman-backed structured products following our recent review, and we acted swiftly and decisively in order to return money to investors as quickly as possible. We will continue to take tough action where we find evidence that firms are giving unsuitable advice to investors.”
