The FSA has published a final notice (dated September 18) issued to Pi Financial Limited, an IFA network firm. The notice imposed a fine of £58,300 for failures in relation to systemic weaknesses in Pi’s systems and controls, and the suitability of advice given to clients. Had Pi not settled at an early stage, the fine would have been £83,363.
Pi was found to have breached Principles 3 (management and control) and 9 (customer’s relationships of trust) of the FSA’s Principles for Business. In respect of Principle 3, Pi had failed to take reasonable steps to organise and control its affairs in a responsible and effective manner. Specific areas of failure included sales monitoring, training and supervision of advisers, and compliance and file checking arrangements. In respect of Principle 9, Pi was found to have lacked reasonable care in advising its clients. In particular, none of its recommendations to invest in unregulated collective investment schemes (UCIS) or structured products was considered suitable for the clients concerned.
Pi’s failures were considered to be aggravated, due to previous concerns having been raised by the FSA regarding systems and controls, and the availability of extensive guidance on ensuring product suitability in relation to the products Pi had advised on. However, the FSA also commented that Pi’s failings were partially mitigated, as it had attempted to address the FSA’s concerns and had voluntarily varied its permission such that it can now no longer arrange or promote UCIS.