Network fined £49k for poor management of advisers

The Financial Services Authority (FSA) has fined and banned a network director for failing to ensure advisers under his management were qualified and competent.

Julian Harris, the sole proprietor of Julian Harris Financial Consultants and the sole shareholder of Julian Harris Mortgages Limited, both of which are networks, has been fined £49,000.

The FSA has also banned Harris from performing the compliance oversight function CF10 and from acting as a compliance officer.

The FSA has taken this action because between 31 October 2004 and 22 July 2010 Harris, who was responsible for the firms, failed to perform adequate due diligence on appointed representatives (AR) and advisors before appointing them or employ ARs who were fit and proper.

He also failed to put in place adequate training and oversight procedures for staff and maintain systems and controls at his firms, and to monitor their activities to ensure they complied with regulatory requirements.

The FSA considers the misconduct to be serious because regulatory enforcement action has been taken against Harris on two previous occasions.

In addition, the FSA said the breaches were prolonged and as a result new advisers and ARs were not subject to adequate vetting before being appointed, and were not adequately trained or monitored after appointment.

In some cases incompetent or unfit individuals may have been appointed, and customers may have been exposed to the risk of receiving unsuitable advice, the FSA said.

Harris directly caused the firms to breach Principle 3 of the FSA's Principles for Businesses.

Harris agreed to settle this matter at an early stage of the FSA's investigation and therefore qualified for a 30% discount. Were it not for this discount, the fine would have been £70,000.

The final notice can be found on the FSA's website.

In a statement Helen Harris, business development consultant at Julian Harris, said the firm accepts and has taken on board the findings of the FSA staff.

"We have appointed a new head of compliance. Julian Harris will concentrate on the business aspects of our networks.

"All remedial work and improvements to our systems and controls have taken place and we believe we have a good ongoing relationship with our FSA supervisor.

"We believe this action has put us in a stronger position than previously and we are optimistic about our future and our offering in the marketplace."