Two IFAs banned over suitability of advice failings

The FSA has banned two independent advisers over suitability of advice failings, but both have escaped fines due to financial hardship.

Peter Stephen Fox, partner at Wheatcroft Fox & Co, has been prohibited from practicing for his failure in his role as an approved person.

His Birmingham-based company has been publicly censured for systems and controls failings, an inability to demonstrate the suitability of its advice - particularly on high-risk pension products - and for failing to cooperate with the FSA.

Were it not for verified evidence of financial hardship, the company would have been fined £45,000 and Fox himself £15,000.

Failings at Wheatcroft were identified during an FSA TCF visit to the company in November 2008. The regulator said it had concerns about the amount of client information advisers were collecting before making recommendations.

The FSA also pointed out an external compliance consultant had first indentified failings in the sales and advice processes in 2006, which were again raised in subsequent years, but Wheatcroft Fox failed to make substantive changes as a result.

In a separate case, the FSA has publicly censured and prohibited another West Midlands based IFA, Gary John Hexley, for giving customers unsuitable investment advice. Hexley, too, escaped a fine of £20,000 due to his bankruptcy.

In Hexley's case, the failings related to investments through his own property development company, Greenfield International, which he set up on 2003, and investment advice he gave while working as an adviser at Exclusive Asset Management in the 15 or so months to May last year.

The FSA said he inadvertently made misleading statements to the FSA and investors by stating investors had received shares in Greenfield in return for the investments that they had made. It later transpired they had not.

Additionally, he made false assurances and failed to disclose accurately to investors when they would receive repayment of their investment, the complex nature of Greenfield's structure and the high risk nature of the investment.

In one case, Hexley recommended a pension transfer for a customer even though he did not have the appropriate permissions to do so.

The FSA said it views Hexley's failings as particularly serious as it resulted in significant losses being suffered by the consumers who invested in Greenfield, which is now in liquidation.