The Financial Services Authority (FSA) has taken action against Essex-based IFA Baronworth Investment Services and its chief executive Colin Jackson over failures relating to the promotion of Keydata and other structured products.
The regulator said that the firm offered a variety of high income products to its customers on a direct offer and non-advised basis, including structured products and Keydata.
When promoting Keydata Protected Portfolio Plan in 2006 it heavily promoted the potential benefit of ‘100% capital protection at maturity’, the FSA said.
Baronworth issued financial promotions for a number of complex structured products which failed to include an adequate explanation of the nature of those products, the FSA said this was significant because the firm’s mailing distribution list mainly consisted of retail clients.
Baronworth also failed to handle its complaints appropriately, which arose from its promotions of the Eurolife Secured Bond ISA, the regulator said.
When consumers did complain, Jackson would respond stating that the firm was not responsible for the advice behind the product because they had been purchased on an execution-only basis.
The FSA said that a number of the financial promotions did not contain accurate or sufficient information on the availably of compensation under the Financial Services Compensation Authority.
Jackson has received a partial prohibition from performing any significant influence function, which included being chief executive, principal shareholder, compliance oversight and director.
The FSA also sought to impose a financial penalty of £50,000 on the firm, but because Baronworth entered into liquidation on 17 July 2012 it was reduced to nil so that any funds could be returned to creditors.
Bill Sillett, FSA head of retail enforcement, said: ‘This particular case emphasises the need for authorised firms and approved persons to ensure that their financial promotions are clear, fair and not misleading, especially when they are carried out on a direct offer or non-advised basis.’