Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/new-model-adviser/article/a400268
FSA condemned for ignoring role of banks in Integrity censure
by Nicholas Paler on May 18, 2010 at 08:27
The Financial Services Authority (FSA) has come under fire for failing to examine the roles of state-owned Bank of Scotland (BoS) and Newcastle Building Society (NBS) as part of its investigation into Integrity Financial Solutions.
The FSA censured Integrity for its failures as a product provider and adviser on geared traded endowment policies (GTEPs), but did not comment on the role of BoS and NBS, which provided loans to allow investors to gear the products.
Paul Nedas of Financial Advice Liability said: ‘The FSA has skirted around the loan issue and therefore the responsibility of BoS and NBS for providing the geared TEP loans.’
NBS said it was not responsible for the policy sales advice, while BoS said it assessed whether a customer would be able to repay the debt.
FSA director of enforcement and financial crime Margaret Cole (pictured) said the regulator had not imposed the £350,000 fine it would have recommended because Integrity is in liquidation.
‘We believe any money left should be used to meet customer claims,’ she said.
In its final notice on Integrity, it said 47 claims against the firm had been lodged with the Financial Services Compensation Scheme (FSCS), although not all may relate to GTEPs.
New Model Adviser revealed last month that Integrity, which went into liquidation last October, could face claims of up to £80 million from clients.
The average investor is understood to have had around £100,000 invested. As the FSCS pays out a maximum of £50,000 per claim, this means in total £40 million of claims could fall on the scheme.
Those claims could land on advisers thanks to the FSCS reportedly classifying Integrity as an investment intermediary.
Former boss of Integrity Iain Stamp, meanwhile, is marketing a new currency trading product to financial advisers, despite the failure of a currency product he marketed for Integrity.
Markets
News sponsored by:
Today's top headlines
- Ofqual criticises CII level four diploma over gaps and easy questions
- FSA: Platforms can't reward IFAs for assets after RDR
- SimplyBiz's Ken Davy to launch restricted national
- FSA warns over advisers failing to consider cost of fund switches
- Concept hopes to fill client knowledge gap with ISA handbook
More about this article:
More from us
- FSA censures Integrity but waives £350,000 fine
- Integrity scandal: advisers could foot £40m FSCS bill
- Integrity offered advisers up to 14% commission
- Integrity scandal: how Maximiser was marketed to advisers
6 comments so far. Why not have your say?
Phil Castle
May 18, 2010 at 08:46
If you read the FSA's own report on Intergrity
FSA/PN/078/2010
12 May 2010
"The Financial Services Authority (FSA) today publicly censured Integrity Financial Solutions (Integrity) for failings in its role as a product provider and adviser of geared traded endowment policies (GTEPs). "
In the heading you will see it refers to their failing as a product provider and it keeps using the word "product" in the report http://www.fsa.gov.uk/pubs/final/integrity.pdf so are you now telling me despite using the word in the FSA report x 90times, they are going to lump this again on intermediaries in that part of the FSCS levy and NOT providers and not even look at the involvement of the banks, who will have profited from the interest and charegs levied on the mortgages arranged?
report thisGareth Fatchett
May 18, 2010 at 09:18
Phil,
Integrity not only provided the products it also advised on them.
These claims relate to their own advised cases.
Therefore, the levy would relate to the D2 activity of "Advising" or "Acting as Agent".
Gareth Fatchett
report thisPhil Castle
May 18, 2010 at 09:41
Yes I saw that they both designed the product and had a seperate IFA section who advised. The product was flawed, so one would hope liability falls there and not on the intermediary sector, but I doubt it, I suspect this will mean anotehr interim levy of £600-£4,000 per intermediary firm just as we saw with Keydata and Pac Cont etc. We're not a bottomless pit and this has to come from somwehere and as things stand, it will need to be passed on to our clients once our pforits have been exhausted in fees.
report thisMary Childs
May 18, 2010 at 10:09
Who are these lucky intermediary firms who got away with £600 to £4,000 for Keydata? Ours was far more than that.
report thisJulian Stevens
May 18, 2010 at 12:56
And will indefinitely until somebody or institution with the balls and the brass takes on the FSA in court.
Meanwhile, the FSA remains immune to pretty well everything from those of us out here who support its very existence and all the let down investors who thought the FSA is supposed to be there to provide investor protection.
If ever there was a national disgrace, it has to be the FSA.
report thisPhil Castle
May 18, 2010 at 14:31
The FSCS levy is turnover related, hence a small one man firm with modest turnover in teh relevant fee group might have a bill of £600, or if they did a lot in the relevant fee group even a one man firm could have a £4k bill. As big firm with high turnover of any nature could well have a bill in excess of £4k, Charlie of Independant said theirs was £100k+
report thisleave a comment
Please sign in here or register here to comment. It is free to register and only takes a minute or two.