Adviser fined £16k for UCIS promotion failures

The Financial Services Authority (FSA) has fined an independent financial adviser £16,000 after his firm gave unsuitable advice on unregulated collective investment schemes (UCIS) and flouted rules related to who the schemes can be promoted to.

Ian Jones, director at IFA Specialist Solutions Public Limited Company, has also been prohibited from dealing with the promotion of UCIS until he can "remedy his lack of competence and capability".

The regulator said Jones failed to "ensure that customers were given suitable advice to invest in UCIS" and had implemented inadequate compliance procedures.

It also said the firm's had not implemented appropriate training and competence procedures for its advisers to promote UCIS and had failed to conduct adequate due diligence on the funds being promoted.

Specialist Solutions started promoting and giving advice on UCIS in 2007 and recommended the products to 101 customers who invested a total of £11,244,923 in one or more of three UCIS, generating commission of £321,827.

However, subsequent investigations by the FSA found, in 46 cases, there was no exemption to section 238 of the Financial Services and Markets Act 2000, which prohibits the promotion of UCIS by authorised firms.

A more detailed review of 20 customer files found only three files demonstrated suitable advice, with nine files demonstrating unsuitable advice. In the remaining eight files, it could not be determined whether the advice was suitable.

The FSA said the majority of the firm's UCIS recommendations had been made by two advisers who have since left the firm and pointed out its external compliance consultants had also failed to identify any problems.

Having agreed to settle at an early stage of the FSA's investigation, Jones qualified for a 20% discount under the FSA's executive settlement procedures.

Earlier this year, Specialist Solutions was fined £35,000 for the UCIS-related failures and, since June 2010, has not promoted or given advice on UCIS, having voluntarily changed its permissions.

The FSA added: "Under Mr Jones' management Specialist Solutions has undertaken a past business review and has agreed, in principle, to contact customers who may have been missold UCIS with a view to providing redress to those customers, if any, who have suffered detriment."