IFA censured for investment advice failings

The Financial Services Authority (FSA) has censured Exclusive Asset Management, a Birmingham based IFA, for investment advice failings.

The FSA found systems and controls failings at the firm, that it could not demonstrate the suitability of its advice and failed to communicate with clients in a clear, fair and not misleading way.

Exclusive went into voluntary liquidation on 24 May 2011. Were it not for Exclusive's financial circumstances, the FSA would have imposed a financial penalty of £60,000.

The enforcement action relates to Gary John Hexley, who worked for Exclusive between 15 January 2009 and 25 May 2010, and was publicly censured and banned by the FSA on 13 June 2011 for giving customers unsuitable investment advice.

The failings at Exclusive were identified during an unannounced FSA visit on 21 April 2010 following complaints about Hexley.

The FSA investigation identified a number of systems and controls failings specifically in relation to Hexley's compliance standards.

However Exclusive failed to ensure sufficient monitoring of Hexley.

As a result he failed to obtain and record sufficient information about customers before giving them advice, failed to explain the reasons for his recommendations or to assess adequately customers' attitudes to risk.

Hexley also failed to research product recommendations and instead relied on a small selection of preferred investments which yielded higher commission.

Exclusive also failed to ensure the ongoing training and competency of its staff.

It also failed to record sufficient information about customers' personal and financial circumstances to ensure the suitability of any advice it gave, or to ensure that its systems and controls were adequate to monitor the suitability of its advice.

Tom Spender, FSA head of retail enforcement, said:"Financial advisers and providers alike must take notice of Exclusive's failings and ensure they learn from them.

"Firms operating in this industry must comply with the FSA's rules and we will take robust action against firms and individuals who fail to demonstrate the required standards."