The UK Financial Conduct Authority (FCA) today issued a Warning Notice Statement regarding three individuals involved in a £5.9 million fraudulent scheme.
The regulator confirms that it gave each of the three individuals a warning notice proposing to take action (including the proposed imposition of financial penalties) in respect of their misconduct:
- An individual working at a retail advisory stockbroker whilst an approved person.
- An independent financial adviser working at an advisory firm whilst an approved person.
- Another independent financial adviser working at the same advisory firm whilst an approved person.
The FCA considers that the three individuals failed to act with integrity in carrying out their controlled function(s) in breach of Statement of Principle 1 contained within the FCA’s Statements of Principle and Code of Practice for Approved Persons (APER).
The conduct collectively took place between January 2015 and November 2017.
In particular, the FCA considers that the individuals each played an integral role in a pension scam and colluded together to ensure that customers were recommended to switch/transfer their existing pension funds into a self-invested personal pension (SIPP) which would be invested into certain high-risk and mainly illiquid investments in investment companies seeking to raise funds.
In return, the investment companies were requested to make substantial marketing and other payments to the individuals. In total, the scam generated approximately £5.9 million in such payments to the individuals and others involved in it.
The individuals were motivated by financial benefit. The decisions made by the individual working at the retail advisory stockbroker and the advice provided by the independent financial advisers were driven by profit, were inevitably unsuitable and exposed all customers to a very significant risk of detriment and, in many cases, actual loss.
The individuals deliberately concealed their receipt of marketing commissions and other payments from customers.
The FCA considers that the individuals’ conduct amounts to a lack of integrity.