Two former directors of Alpha to Omega IFA network have been fined for compliance failings by the FSA.
Andrew Ruff and Richard Lindley, the directors in question, were fined after putting customers at risk of receiving investment advice that was not suitable.
Richard Lindley was fined £14,000 while Andrew Ruff was banned, in addition to facing a hefty fine of £28,000.
Alpha to Omega (UK) Limited (A2O), which was first investigated back in 2009 when the FSA reviewed some customer files of an appointed representative at A2O, entered administration in January last year.
Because of the 2009 findings, A2O was ordered to review the company’s compliance systems by appointing a person with the relevant skill-set.
The individual uncovered widespread compliance failings within the company, putting A2O’s customers at risk of receiving unsuitable investment advice.
The firm failed to protect customers from high risk options such as Unregulated Collective Investment Schemes (UCIS schemes), the FSA ruled.
The acting director of enforcement and financial crime, Tracey McDermott, said: ''Lindley and Ruff shared the ultimate responsibility for ensuring the financial advice provided by their network of advisers was suitable for their clients.
“They both failed in their responsibilities and this resulted in unsuitable advice being provided to some clients.”
The FSA stated that the two directors had been fined because they failed in their responsibility to control and monitor sales made by A2O’s appointed representatives.
They also stated that A2O lacked control and oversight over the network of advisers, which led to the risk that its appointed representatives were not offering suitable advice and treating customers fairly.
According to the FSA, “A2O failed to collect relevant and accurate management information to enable them to adequately identify, monitor and mitigate the compliance risks to which the business was exposed.”
Furthermore, the FSA stated, they ‘failed to take appropriate action in order to correct the behaviour of appointed representatives when they became aware of potential compliance risks’.
Ruff, whose role was that of Compliance Director, was banned because he was primarily responsible for the compliance arrangements at the firm.
Additionally, the FSA’s final notice reveals that Ruff was aware of a group of advisers, “so notorious with A2O that they were given nicknames such as ‘the famous five’ and ‘the three amigos’” who were well known for recommending high risk products including UCIS.
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