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26/11/2003
'Wealth' company group censured for financial irregularities
St James's Place Wealth Management Group plc has been fined £250,000 by the Financial Services Authority (FSA) over serious monitoring and record keeping inadequacies.
St James's Place UK plc, St James's Place International plc and St James's Place Unit Trust, were fined over "failings" that exposed investors to the risk of "surrendering existing investment contracts and committing money to new investment contracts in circumstances where this may not have been in their interests".
The fine is apportioned equally between the three companies, which are subsidiaries of St James's Place Wealth Management Group plc.
This disciplinary action relates to recommendations made to customers by the firms' Appointed Representatives to surrender and replace existing investment contracts that had been arranged by competitor product providers and the firms' monitoring of these transactions, the FSA said.
These two connected transactions are together referred to as "a replacement sale". The firms' procedures for monitoring replacement sales failed to detect, and prevent, serious deficiencies in record keeping. This meant that it was impossible to check whether or not the sales had been suitable for the investors without obtaining further information, the FSA said.
Andrew Procter, FSA Director of Enforcement, said: "Firms must understand that procedures to monitor advisers, particularly where high-risk transactions are being recommended, are not a 'nice to have', they are a necessity.
"It is essential that senior management take responsibility to ensure that procedures are in place to make sure that advisers are doing their job properly."
The problems were identified in August 2001 during a visit to St James's Place UK by the Personal Investment Authority (PIA), one of the FSA's predecessor regulators.
In deciding the level of penalty to be imposed, the FSA has taken into account that, while the firms' failings in this case were serious, the firms are considered to have co-operated in the Enforcement investigation and in conducting remedial action where required.
(gmcg)
St James's Place UK plc, St James's Place International plc and St James's Place Unit Trust, were fined over "failings" that exposed investors to the risk of "surrendering existing investment contracts and committing money to new investment contracts in circumstances where this may not have been in their interests".
The fine is apportioned equally between the three companies, which are subsidiaries of St James's Place Wealth Management Group plc.
This disciplinary action relates to recommendations made to customers by the firms' Appointed Representatives to surrender and replace existing investment contracts that had been arranged by competitor product providers and the firms' monitoring of these transactions, the FSA said.
These two connected transactions are together referred to as "a replacement sale". The firms' procedures for monitoring replacement sales failed to detect, and prevent, serious deficiencies in record keeping. This meant that it was impossible to check whether or not the sales had been suitable for the investors without obtaining further information, the FSA said.
Andrew Procter, FSA Director of Enforcement, said: "Firms must understand that procedures to monitor advisers, particularly where high-risk transactions are being recommended, are not a 'nice to have', they are a necessity.
"It is essential that senior management take responsibility to ensure that procedures are in place to make sure that advisers are doing their job properly."
The problems were identified in August 2001 during a visit to St James's Place UK by the Personal Investment Authority (PIA), one of the FSA's predecessor regulators.
In deciding the level of penalty to be imposed, the FSA has taken into account that, while the firms' failings in this case were serious, the firms are considered to have co-operated in the Enforcement investigation and in conducting remedial action where required.
(gmcg)
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