FSA fines former Alpha 2 Omega directors

The Financial Services Authority (FSA) has fined two former directors of Alpha 2 Omega (A2O), the adviser network which closed down in 2010, over compliance failings which led to the risk of customers receiving unsuitable investment advice.

Directors Andrew Ruff and Richard Lindley were fined £28,000 and £14,000 respectively.

Ruff was also banned from giving advice as the FSA found he was primarily responsible for compliance arrangements at the firm.

These failings led to customers being at risk of receiving unsuitable investment advice, the FSA said.

The regulator began its investigation into A2O in March 2009 when it reviewed some of the customer files assigned to an A2O appointed representative.

As a result of that work, A2O was required to appoint a skilled person to review the compliance systems at A2O. The skilled person highlighted widespread compliance failings at the firm which led to the risk of customers receiving unsuitable investment advice.

This was particularly problematic where customers had been recommended high risk investments such as certain Unregulated Collective Investment Schemes (UCIS), according to the FSA.

A2O agreed to stop its appointed representatives recommending a number of UCIS schemes.

However, A2O failed to make the necessary improvements to its compliance systems and on 18 January 2010 FSA required A2O to cease conducting all regulated activities.

Ruff and Lindley were found to have failed to control and monitor the sales made by its representatives.

The FSA said the pair failed to collect relevant management information in order to identify, monitor and mitigate compliance risks the business was exposed to.

They then failed to correct the behaviour of representatives when they became aware of compliance risks, the regulator said.

Tracey McDermott, FSA acting director of enforcement and financial crime, said: "Lindley and Ruff shared the ultimate responsibility for ensuring the financial advice provided by their network of advisers was suitable for their clients.

"They both failed in their responsibilities and this resulted in unsuitable advice being provided to some clients.

"Those who oversee networks of appointed representatives need to ensure that they keep a close eye on the advice being given throughout their network, especially where the advice includes high risk products such as UCIS.

"If there are failings in the way customers are treated anywhere in the network, the principals will be held to account."