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UK firm fined £25,000 for failure to monitor, supervise and manage its appointed representatives

Out-Law News | 08 Jan 2014 | 4:41 pm | 1 min. read

A firm has been fined £25,000 by the Financial Conduct Authority (FCA) for the misconduct of two of its sales staff acting as its 'appointed representatives' (ARs). Amongst other cases of misconduct, the ARs were found to have used "high-pressure sales tactics and misleading information" to push vulnerable customers into buying insurance policies.

The firm, Porta Verde Financial Services Ltd (Porta Verde), breached Principles 3, 6 and 7 of the FCA's Principles for Business, according to the regulator. The firm was fined for failings in relation to the appointment, management and monitoring of its ARs. It would have been subject to a substantially larger fine of £353,800, minus a 30% discount for settling at an early stage of the investigation, had it not been in serious financial hardship.

"Porta Verde is responsible for the unacceptable sales tactics used by its representatives," said Tracey McDermott, the FCA's director of enforcement and financial crime. "Firms should be in no doubt that we will take action when they – or their appointed representatives – fail to treat their customers fairly."

ARs are individuals or firms that carry out regulated activities under the oversight of a 'principal' which is directly authorised by the FCA; in this case Porta Verde. The principal is ultimately accountable to the regulator for the conduct of its ARs' regulated activities.

In its final notice to the firm, the FCA set out details of a number of instances of mis-selling by the ARs which occurred between October 2010 and June 2012; many of which involved elderly and vulnerable customers. On one occasion a sales agent misled the carer of a customer who had impaired hearing in order to obtain permission to process payments. Another had been led to believe that he had been contacted by his satellite provider about his monthly subscription fees and not any additional insurance cover.

The final notice was issued after Porta Verde failed to take adequate remedial action against the ARs' multiple failings following an investigation by the FCA's predecessor, the Financial Services Authority (FSA).

"The fine levied against Porta Verde, which would have been substantially more had it not been in serious financial difficulty, is a timely reminder to all firms with ARs that they should have both adequate systems and controls in place to monitor and supervise their ARs, and have the ability to take remedial action when the conduct of their ARs falls below that required under applicable FCA rules," said financial regulation expert John Verwey, of Pinsent Masons, the law firm behind Out-Law.com.