Release Date: 16th May 2022
To access the original FCA document, click here.
Summary
Bank House Investment Management Limited (BHIM), now in liquidation, was fined £311,639 by the Financial Conduct Authority (FCA) on 16 May 2022. The penalty was imposed due to breaches of regulatory requirements between 9 September 2014 and 12 December 2016. BHIM was found to have acted dishonestly and recklessly in relation to its pension advice business and carried out regulated activities without the necessary permissions.
Key Takeaways for Other Firms:
- Integrity and Honesty:
- Always act with integrity and avoid any dishonest behaviour in business operations.
- Ensure all business communications and records are accurate and transparent.
- Proper Authorisation:
- Obtain and maintain the necessary permissions for all regulated activities.
- Do not engage in regulated activities without the appropriate authorisations.
- Due Diligence and Oversight:
- Conduct thorough due diligence on all investment products and service providers.
- Maintain effective oversight and control over all outsourced functions and third-party service providers.
- Conflict of Interest Management:
- Disclose all potential conflicts of interest to clients.
- Ensure that clients are fully informed about the nature and risks of the services and products offered.
Summary of Findings:
- Dishonest and Reckless Conduct:
- BHIM used a pension review and advice process heavily influenced by a third party, HJL, which had a financial interest in the high-risk, illiquid assets recommended to customers.
- BHIM misled customers by presenting itself as providing independent advice while failing to disclose HJL’s involvement and financial interests.
- Failure to Conduct Due Diligence:
- BHIM did not adequately investigate the high-risk Bonds it recommended, relying solely on information from HJL, which had a vested interest.
- BHIM did not consider the suitability of these investments for its customers, many of whom were vulnerable.
- Regulatory Breaches:
- BHIM provided pension transfer advice without the necessary regulatory permissions, breaching section 20 of the Financial Services and Markets Act 2000.
- The firm also violated a voluntary requirement imposed by the FCA by continuing to advise on pension switches despite a prohibition.
- Lack of Oversight and Misleading Information:
- BHIM allowed HJL and another service provider, CAL, to perform key functions without adequate supervision.
- BHIM provided false and misleading information to the FCA about its business arrangements and compliance with regulatory requirements.
In conclusion, the FCA’s action against BHIM highlights the critical importance of acting with integrity, maintaining proper authorisations, conducting thorough due diligence, and ensuring effective oversight of all business activities. Firms must prioritise transparency and full disclosure to protect customers and comply with regulatory standards.
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