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RSM Tenon fined £700k over structured product sales 'flaws'
by Iain Martin on Feb 25, 2010 at 10:44
The Financial Services Authority has fined RSM Tenon Financial Services £700,000 for flaws with its advice on Lehman-backed structured products.
RSM Tenon Financial Services has been ordered to review its sales of Lehman-backed and other structured products and compensate them for unsuitable advice.
The FSA identified that Tenon failed to treat customers fairly in its sale of Lehman-backed investment plans between November 2007 and August 2008. Tenon did not asses the risk of structured products and failed to provide suitable advice, according to the FSA.
Two more advice firms are expected to be censured by the FSA for the problems with Lehman-backed structured products. The FSA reviewed the structured product market following the collapse of Lehman Brothers in September 2008. Many clients and advisers were unaware that the US investment bank was the counterparty underpinning structured products offered by Legal & General, Meteor Asset Management, NDFA and Defined Returns Limited.
The FSA also identified flaws with Tenon’s advice on pensions switching and its failure to assess the suitability of its recommendations. Tenon has been ordered to review its pension switching recommendations and compensate clients who have been mis-sold.
‘This is the first action we have taken for advice failings relating to Lehman-backed structured products following our recent review, and we acted swiftly and decisively in order to return money to investors as quickly as possible,’ said Margaret Cole, head of enforcement at the FSA. ‘We will continue to take tough action where we find evidence that firms are giving unsuitable advice to investors.’
The FSA ordered Tenon to appoint a skilled person to review its current sales and complicated regime relating to investment sales and suitability recommendations. Tenon cooperated and settled with the FSA at an early stage, which meant its fine was cut from £1 million.
RSM Tenon was formed out of the merger of listed accountancy group Tenon and Telford-based accountants RSM Bentley Jennison, which was partly backed by Standard Life. The merger of the two groups, which both had financial services arms, created corporate chartered firm RSM Tenon Financial Services, which has around 120 advisers.
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