The FSA has imposed prohibitions on Paul Banfield and Anthony Moss, former directors of Best Advice Financial Planning Limited, a small independent financial advice firm which was based in Surrey.
Best Advice Financial Planning was dissolved on 20 July 2011. It has no link to BestAdvice.net or its publisher, BestAdvice.net Limited.
The regulator found that weaknesses in the firm’s systems and controls had resulted in customers being exposed to the risk of receiving unsuitable advice.
Both Banfield and Moss have been prohibited from holding any significant influence function (SIF), while Banfield has also been prohibited from being an investment advisor and fined £15,000. Moss would have been fined £20,000 but this was not enforced as he was able to provide evidence of financial hardship.
As Moss and Banfield were directors at the firm it was their responsibility to ensure systems and controls met FSA standards. However, the FSA found that at least 22 customers were advised to invest in unregulated collective investment schemes (UCIS) but found no evidence that the firm either understood the regulatory requirements relating to the promotion of these investments or took reasonable care to ensure customers received suitable advice.
In one instance, a customer (Mrs A) was advised to cash in a number of existing investments and reinvest in several UCIS through an offshore bond. Best Advice Financial Planning failed to consider whether Mrs A was eligible to invest in a UCIS or adequately assess her attitude to risk. It also failed to assess her existing investments before making a recommendation, despite Mrs A specifically requesting such an assessment. Mrs A was 87 at the time and more than 80 per cent of her funds were reinvested in UCIS.
During its investigation both Moss and Banfield admitted to the FSA that they did not fully understand the regulatory restrictions on UCIS despite their firm recommending them to customers.
Although UCIS are not authorised schemes there are regulations surrounding their promotion. Therefore people carrying on regulated activities in relation to them, such as giving a personal recommendation, are subject to FSA regulation.
Tom Spender, head of retail enforcement at the FSA, said: “Last year we published the findings of a thematic review that looked at the sale of UCIS by small firms. In it we set out our concerns that firms lacked awareness of the regulatory requirements
