The Financial Services Authority has fined Moneywise IFA Limited £19,600 for failing to have sufficiently robust compliance arrangements for the investment advice it gave customers using platforms and discretionary portfolios.

Mis Sold Investments

n investigation by the FSA found that Moneywise did not ensure its compliance arrangements evolved as the business grew. As such, the firm did not have robust arrangements for training advisers and ensuring suitability reports were clear, fair and not misleading.

Moneywise also recommended platform-based investment to 519 customers but failed to ensure its advisers explained their rationale clearly to investors. Furthermore, the firm didn’t ensure its advisers understood the reasons for making such a recommendation.

The FSA also found that Moneywise had not made it clear to customers that some of the underlying investments contained Unregulated Collective Investment Schemes (UCIS) and the associated risks that needed to be understood prior to investment.

Despite these failings, the FSA did not find any evidence that customers had suffered any financial detriment. Furthermore, Moneywise appointed an external compliance consultant, made changes recommended by the consultant, and appointed a new compliance officer at board level.

Because of these improvements, and Moneywise’s agreement to settle at an early stage of the investigation, the firm qualified for a 30% discount. Without the reduction, the fine would have been £28,000.

Margaret Cole, the FSA’s director of enforcement and financial crime, said:

“As Moneywise’s business model evolved to include wrap platforms, sadly its compliance function and elements of its staff training did not keep pace.

“Firms that move to platform-based investment models need to ensure their advisers are properly trained and understand the nature of all of the underlying investments. They must also make sure they are properly supported by adequate compliance arrangements.

“It’s imperative that customers have a full understanding of where and how their money is being invested. Following the thematic review we’re seeing some good progress being made but it is vital that this continues to ensure investors are treated fairly.”

Platforms are online services, used by intermediaries – and sometimes consumers directly – to view and administer their investment portfolios. As well as providing facilities for investments to be bought and sold, platforms are often used to aggregate, and arrange custody for, customers’ assets.

 

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Tim Capper

Bringing you financial news and information in plain english for Maple Leaf Financial. My aim is to help readers understand these often complex financial instruments.