A2O director failed to act on 'three amigos' pushing UCIS

A former director of collapsed IFA network Alpha 2 Omega (A2O) failed to act on a handful of "notorious" advisers known to be aggressively pushing unregulated collective investment schemes (UCIS) to clients, earning them the monikers 'the famous five' and 'the three amigos', FSA papers reveal.

Andrew Ruff was in charge of compliance at A2O, which entered administration in January last year after the FSA ordered it to stop carrying out regulated activities.

Ruff was today banned by the FSA and fined £28,000 for compliance failings which led to the risk of customers receiving unsuitable investment advice. Another director, Richard Lindley, was fined £14,000.

The FSA's Final Notice for Ruff reveals he was aware of a group of advisers among its 47 appointed representative (AR) firms who recommended a 'significant' amount of UCIS and other high risk products.

These individuals "were so notorious within A2O that they were given nicknames such as 'the famous five' and the 'the three amigos'," the notice reads.

They were recognised by A2O employees as posing an ongoing compliance concern as they routinely failed to disclose business written to A2O and failed to provide information to the compliance team.

However, Ruff did not act accordingly. The firm's compliance records show that none of the advisers nicknamed 'the three amigos' received a compliance visit in 2009.

One even refused to take a new compulsory test introduced by A2O to demonstrate that he was competent to advise on UCIS investments. This went unchallenged by the compliance team.

The document also reveals Ruff was aware that a number of A2O's AR firms were members of an informal marketing network which actively promoted a number of UCIS funds to A2O's ARs.

Data obtained from one UCIS product provider shows that A2O sold the greatest volume of investments in UCIS funds for that provider, amounting to £6.9m, compared to other firms.

Accordingly, A2O's network involved a business proposition that would be attractive to experienced IFAs with an interest in targeting increases in sales and new and innovative products," the FSA said.

"To mitigate this compliance risk required robust oversight and monitoring of advisers and any higher risk products sold to consumers."

A2O agreed to stop its ARs recommending a number of UCIS schemes after the FSA exposed the compliance failings in 2009.

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

On 25 January 2010, it entered administration and is now in liquidation.