FCA Publishes Decision Notices Against Directors for Acting Without Integrity

The FCA has published Decision Notices against five directors (Andrew Page, Thomas Ward, Aiden Henderson, Robert Ward, Tristan Freer) and three firms (Financial Page Ltd, Henderson Carter Associates Ltd and Bank House Investment Management Ltd) for acting without integrity. The individuals concerned were said to have given unsuitable pensions advice and provided false and/or misleading information to the FCA.

The five directors, and Bank House Investment Management Ltd., have referred their Decision Notices to the Upper Tribunal, where the parties will present their respective cases. Any findings in the Decision Notices are provisional. They reflect the FCA’s belief of what happened and how it considers that the behaviour of those involved should be characterised. The Upper Tribunal will determine what action, if any, the FCA should take.

An outline of the FCA’s proposed sanctions against each party is as follows:

Firm/Individual

Sanction

Financial Page Ltd (in liquidation)

Public Censure

Andrew Page (Director of FPL)    

Prohibition and penalty of £321,033

Thomas Ward (unapproved de facto director of FPL)

Prohibition and penalty of £416,558

Henderson Carter Associates Limited (in liquidation)

Public Censure

Aiden Henderson (Director of HCA)

Prohibition and penalty of £179,179

Bank House Investment Management Limited

Penalty of £311,639

Robert Ward (Director of BHIM) 

Prohibition and penalty of £88,100

Tristan Freer

Prohibition and penalty of £52,725

 

The FCA considers that Financial Page Ltd (FPL), Henderson Carter Associates Ltd (HCA) and Bank House Investment Management Ltd (BHIM) had ‘little meaningful oversight and involvement in the advice provided to customers in their name’. It is also claimed that important functions were outsourced to unauthorised third parties.

It is further noted that HCA, FPL and BHIM ‘held themselves out to customers as providing bespoke independent investment advice based on a comprehensive and fair analysis of the whole market, but that did not reflect the reality of the service that was provided.’ Customers were apparently recommended products that were high risk and unsuitable. As of 29 January 2019, some 1,106 customers of FPL, HCA and BHIM have been compensated by the Financial Services Compensation Scheme (FSCS) to the sum of £26.8m.

It is claimed that directors Andrew Page (FPL), Aiden Henderson (HCA), Robert Ward (BHIM) and Tristan Freer (BHIM) should have reasonably known that the pensions products were unlikely to be suitable for the majority of customers, but they ignored the risks. It is said that they also acted ‘dishonestly’ in that they provided information to the FCA that was false and/or misleading.

Thomas Ward is said to have acted as a director for Financial Page Ltd, despite the fact that he had not been approved by the FCA to do so.  It is claimed that ‘Mr Ward disregarded the interests of FPL’s customers and showed a willingness to enrich himself at their expense.’ The FCA also considers that Mr Ward ‘took deliberate steps to control and influence the information that FPL disclosed to the FCA and encouraged Mr Page to withhold important information and deliberately drafted communications that were false and/or misleading.’

The Senior Managers and Certification Regime (SM&CR), which will apply to solo-regulated firms from December, aims to improve conduct in the financial services sector from the top down and bottom up. The case described here is an example of where individuals have acted without integrity and not been open and co-operative with the regulator.

The FCA has written a set of Conduct Rules which are intended to improve individual behaviour and increase personal accountability. They will apply to all individuals within a firm (excluding ancillary staff), not just individuals that are approved.

The two tiers of Conduct Rules are as follows:

First Tier – Individual Conduct Rules

1. You must act with integrity

2. You must act with due care, skill and diligence

3. You must be open and cooperative with the FCA, the PRA and other regulators

4. You must pay due regard to the interests of customers and treat them fairly

5. You must observe proper standards of market conduct

Second Tier – Senior Manager Conduct Rules

SC1. You must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively

SC2. You must take reasonable steps to ensure that the business of the firm for which you are responsible complies with the relevant requirements and standards of the regulatory system

SC3. You must take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibility effectively

SC4. You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice

It is important that staff are aware of the Conduct Rules, the standards of behaviour that are expected of them and what is considered a breach of the rules. This is particularly pressing for Senior Managers and Certification Staff, however, who will need to have been trained in and abide by the Conduct Rules from the start of the new regime in December 2019. Under SM&CR there will be greater focus from the FCA on promoting positive behaviours and healthy cultures which aim to reduce the kind of harm to customers that is described in this article.

About the author

Ash is Managing Director at RWA. He has over 15 years’ experience in the legal and compliance field and ten years in broker sales and leadership roles in national and global insurance firms.

He is highly skilled in the application of risk-based regulation, working closely with businesses at executive and board level to develop commercially viable, compliant systems and controls. Ash is adept in providing solutions-based interpretations of the FCA’s technical standards and facilitating the transfer of compliance skills and education needed for businesses to self-manage their own compliance and training needs.

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