Release Date: 7th January 2013
To access the original FSA document, click here.
Summary
Thomas Wilhelm Reeh was fined £10,000 by the Financial Services Authority (FSA) after the Upper Tribunal reviewed his case and adjusted the penalties initially proposed. Originally, the FSA decided on a financial penalty of £170,000, which was reduced to £50,000 due to Mr. Reeh’s financial circumstances. However, upon his referral of the Decision Notice to the Tribunal, the penalty was further reduced to £10,000, and the prohibition order initially considered was not imposed.
Mr. Reeh’s misconduct occurred between September 2006 and November 2007 while he was the CEO of Black and White Group Limited, a firm specialising in arranging mortgages and associated insurance. During this period, he was found to have pressured advisers to sell unsuitable Payment Protection Insurance and products from a specific lender, Money Partners Limited, without proper regard for their suitability for customers. Additionally, he did not take sufficient steps to ensure that the company had adequate compliance systems in place and set a profit-focused tone at the company which potentially compromised fair customer treatment. He also failed to provide the FSA with timely and accurate information regarding the company’s capital adequacy and misled the FSA on one occasion.
The Tribunal noted Mr. Reeh’s efforts to rehabilitate himself by establishing a promising new career in financial services in Australia, contributing to his community, and his family commitments. These factors, along with the significant delays in the case, influenced the Tribunal’s decision to reduce the financial penalty, considering the hardship a larger penalty would impose on his young family.
Key takeaways for other firms from this case include:
- Ensuring that all financial products sold are suitable for the customers they are sold to.
- Maintaining effective compliance systems to verify the suitability of the advice given to customers.
- Avoiding a corporate culture that prioritises profit over fair customer treatment.
- Providing regulatory bodies with timely and accurate information and avoiding any misleading statements.
This case underscores the importance of maintaining ethical standards in financial services, with a focus on compliance and customer interests to avoid similar regulatory actions.
Back to the Dear CEO letter archives.