Director fined for keeping IFA concerns quiet

The director of a Cornwall-based IFA has been slapped with a £17,500 fine for failing to tell the FSA about an employee's suspect methods and ethics.

The regulator says Christopher Davies, director of Newquay Investment Services, was responsible for exposing customers to an unacceptable risk of being recommended unsuitable mortgages.

It says after Newquay had applied to the FSA for the adviser to be confirmed as an approved person in May 2008, Davies became aware the adviser had been suspended by his previous employer due to concerns about his business methods and ethics. This conduct included apparently inflating incomes in mortgage applications.

Although Davies raised these concerns with the adviser and concluded he had lied about reasons for leaving his previous employment, Davies failed to disclose this information to the FSA.

The FSA says Davies failed to exercise appropriate control over mortgage applications submitted by the adviser. He also failed to consider whether it was appropriate to allow him to continue giving advice on products and to submit ‘fast track' mortgages.

Margaret Cole, FSA director of enforcement, says Davies should have immediately informed the FSA when he became aware of adverse information relating to the adviser.

"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," she adds.

Davies agreed to settle at an early stage of the FSA's investigation and therefore qualified for a 30% discount under the FSA's executive settlement procedures.