The Financial Conduct Authority has today published plans to ban and fine Alistair Burns, former chief executive at TailorMade Independent Limited (TMI) issuing the former SIPP provider boss with a Decision Notice.
The UK regulator said that Burns has asked to refer this Decision Notice to the regulator’s Upper Tribunal where he and the FCA will each present their case. The Tribunal will then determine the appropriate action for the FCA to take.
The Decision Notice, which reflects the FCA’s view of what occurred and how the behaviour is to be characterised, sets out that the FCA has decided to fine Mr Burns £233,600 and to prohibit him from performing any senior management or significant influence function in relation to regulated activity in financial services, according to a statement issued by the FCA today.
In the FCA’s view, Mr Burns failed to ensure that TMI provided suitable advice to its clients and failed to ensure that TMI managed fairly and clearly disclosed his own personal conflicts of interest and the conflicts of interest relating to other individuals at TMI.
Between January 2010 and January 2013, TMI provided advice to customers who were considering transferring or switching their existing pension funds via self-invested personal pensions (SIPPs) into unregulated investments such as green oil, biofuels, farmland and overseas property (Alternative Investments).
During this period, 1,661 customers invested £112,420,985 in Alternative Investments, many of which were not typically permitted by their existing pension schemes.
In the FCA’s view, the personal recommendations process used to advise customers, for which Mr Burns was jointly responsible, was deemed as “inadequate”.
“The process failed to take into account a customer’s individual circumstances, demands and needs, and instead resulted in personal recommendations being made predominantly on the basis of the customer’s objective of using their existing pension funds to purchase Alternative Investments,” the FCA said.
Further, the Decision Notice sets out the FCA’s view that Mr Burns received “significant financial benefit” from his positions as a director and shareholder of an unregulated introducer also operating under the ‘TailorMade’ name, which referred clients to TMI.
There FCA said that financial benefit Burns (and other individuals at TMI) received from both the fees paid by customers for TMI’s advice and the commission paid to the unregulated introducer for its introduction created a conflict between the interests of Burns (and the other individuals) in the outcome of TMI’s advice and the customer’s interest in that outcome which should have been disclosed to customers and managed using a suitable process.
‘Not fit and proper‘
As a director Mr Burns was required to take reasonable steps to ensure TMI complied with regulatory standards. In the FCA’s view he did not do so. As a result the regulator has decided that he is “not fit and proper to perform senior management or significant influence functions in relation to regulated activity in financial services”.
This is on the basis of his lack of competence to perform such functions. The FCA has not found that Mr Burns deliberately or recklessly failed in his duties, it said.
The FCA added that the Tribunal may uphold, vary or cancel the FCA’s decision. In the case of the decision to impose a penalty, the Tribunal will determine what (if any) is the appropriate action for the FCA to take, and remit the matter to the FCA with such directions as the Tribunal considers appropriate for giving effect to its determination.
In the case of the decision to impose a prohibition order, the Tribunal will determine whether to dismiss the reference or remit it to the FCA with a direction to reconsider and reach a decision in accordance with the findings of the Tribunal. The Tribunal’s decision will be made public on its website.