Release Date: 20th March 2015
To access the original FCA document, click here.
Summary
The Financial Conduct Authority (FCA) has fined and banned Lloyd Pope and Peter Legerton, former directors of TailorMade Independent Ltd (TMI), for failings in pension advice related to self-invested personal pensions (SIPPs). The FCA found both men responsible for exposing customers to unsuitable, high-risk investments, failing to manage conflicts of interest, and inadequate oversight of compliance functions.
Key Points:
- Fined Individuals: Lloyd Pope and Peter Legerton
- Fines: Lloyd Pope’s revised penalty following appeal; Peter Legerton’s penalty not revisited due to financial hardship
- Ban: Both individuals banned from senior positions in financial services
- Reason for Fine: Failure to ensure suitability of SIPP investments, manage conflicts of interest, and oversee compliance
Misconduct Details:
- Unsuitable Investments: TMI advised clients to transfer pensions into high-risk, unregulated investments such as green oil, biofuels, farmland, and overseas property via SIPPs.
- Conflict of Interest: Legerton received commissions from these sales, creating a conflict of interest that was not adequately disclosed to customers.
- Compliance Failures: Both directors failed to act on warnings from external compliance consultants regarding the need to disclose conflicts of interest.
FCA’s Position:
Georgina Philippou, acting director of enforcement and market oversight, stated that Pope and Legerton’s actions exposed customers to risky investments without considering their suitability, leading to potential losses of hard-earned pension funds. Their failings were seen as a significant breach of the standards expected from senior individuals in financial services.
Key Takeaways for Other Firms:
- Ensure Suitability: Assess and ensure the suitability of investment products for customers.
- Manage Conflicts of Interest: Identify, manage, and disclose any conflicts of interest to maintain transparency and trust.
- Effective Compliance Oversight: Regularly review and act on compliance advice to prevent regulatory breaches.
- Protect Consumer Interests: Prioritise the protection of customers’ interests to maintain market integrity.
Conclusion:
The FCA’s actions against Pope and Legerton highlight the importance of robust compliance systems, effective management of conflicts of interest, and the need to prioritise customer protection in the financial services industry.
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