FSA fines network director £49,000 for pension switch failings

The FSA has fined the director of a Gloucestershire-based IFA network £49,000 for putting customers at risk of poor pension switching advice during the business's rapid expansion.

Charles Palmer, head of Financial Ltd, may also face customer compensation claims if it is found unsuitable advice was given.

The FSA found the firm failed to properly organised its business regarding the  monitoring of advisers, leading to concerns about the quality of pension switching advice given between April 2006 and August 2008.

According to the FSA investigation, Palmer failed to put in place an appropriate reporting structure to ensure senior management understood and carried out their responsibilities for monitoring the network's advisers.

He also failed to ensure the firm complied with rules guaranteeing pension switching advice was suitable, and to make sure the firm recruited adequate compliance and support staff during a period of rapid expansion.

The fine takes into account the changes Palmer made to the firm's governance and compliance monitoring arrangements since December 2007 and following a visit from the FSA to ensure it complies with its standards and treats customers fairly.

Margaret Cole, the FSA's director of enforcement and financial crime, says: "As the director of the firm, Palmer was personally accountable for failing to take the steps needed to manage the risk of advisers giving potentially unsuitable advice during a period when the IFA network was expanding so rapidly.

"Palmer's realisation of the need to improve the firm's governance and monitoring arrangements, reinforced by the FSA's intervention, mean the risk to consumers has now been greatly reduced.

She adds: "As we have demonstrated with this case, and the Tenon example last week, we are following up on our promise to take action against firms who are failing to offer customers suitable pension switching advice."

As Palmer co-operated fully with the FSA and agreed to settle at an early stage of the FSA's investigation, he qualified for a 30% reduction in penalty. Were it not for this discount, the FSA would have imposed a financial penalty of £70,000.