FSA fines adviser £60,000 for unsuitable investment advice
The Financial Services Authority has fined a financial adviser in Scotland £60,000 for advising clients to invest in unsuitable products.
Patrick Francis O’Donnell of West Lothian firm P3 Wealth Management was fined for advising his clients to invest in Unregulated Collective Investment Schemes (UCIS) and other non-mainstream investments which were unsuitable for the clients.
The FSA said that examples of non-mainstream investments were wine, crops, unlisted shares, timber and traded life policy investments, although it was not said which were recommended by Mr O’Donnell.
Mr O’Donnell advised 57 of his clients to invest in UCIS. From an FSA sample of 15 customers two thirds invested over 75 per cent of their funds into UCIS and other non-mainstream investments.
Clients included a cautious investor who put 94 per cent of her known assets into non-mainstream investments and a mother who invested 93 per cent of her known pension into UCIS.
After an FSA visit, the body asked Mr O’Donnell to stop selling these products. However, within four days of agreeing to this he permitted £185,306 of UCIS business to be completed.
As Mr O’Donnell was the sole director of the firm, the FSA has cancelled P3’s permission to carry out regulated activities.
Tom Spender, FSA head of retail enforcement, said: “O’Donnell had absolutely no understanding of the regulatory restrictions in place which prohibit advisers from selling UCIS to the vast majority of UK retail investors. He also completely failed to make recommendations that were suitable for his clients’ individual needs and circumstances.
“Such mis-advice cannot continue. UCIS and other non-mainstream investments are often very high-risk, complex products which are not appropriate for most retail investors. We will continue to intervene where we find mis-selling.”