The Financial Services Authority has fined Kilminster Financial Management, a network of independent financial advisers, £42,000 for management and complaints handling failings from January 1 2004 to August 23 2006.
The regulator ruled that Kilminster, based in Bristol, failed to treat its customers fairly because it was not handling complaints in good time.
In addition, it did not monitor its staff sufficiently or keep appropriate training and competence records.
Kilminster also failed to implement appropriate procedures to co-operate with the Financial Ombudsman Service.
The ombudsman referred Kilminster to the FSA twice for failures to pay awards promptly and the FSA had to write to Kilminster about complying with two further ombudsman awards which Kilminster had failed to pay promptly.
Kilminster has now complied with both awards and paid both complainants.
The FSA viewed the failings as particularly serious due to Kilminster’s poor regulatory history.
In April 2000, the Personal Investment Authority issued a formal warning to Kilminster about its selling practices, training and competence arrangements, compliance procedures and recruitment practices which resulted in remedial action.
The PIA also raised further concerns about record keeping, training and competence arrangements and compliance procedures in May 2001 which led to additional remedial action.
Margaret Cole, director of enforcement at the FSA, says: “Kilminster did not implement systems to ensure that its customers were treated fairly and we found a number of failings which contributed to poor quality service.
“All firms should take regulation and their regulatory responsibilities seriously.
“We have been very clear that firms are accountable for ensuring this is done and that appropriate systems are both implemented and maintained.
“As shown in this case, firms must take action in a timely manner whether it relates to an FSA or ombudsman action.
“We also take any previous regulatory action that may have been taken against a firm into account when looking at a case as persistent breaches and a slow response are unacceptable.”
To ensure that the firm complies with FSA standards Kilminster has upgraded its compliance functions by employing more compliance staff and has increased its management oversight of compliance.
It has also engaged independent consultants to review its complaints handling records and procedures and its training and competence arrangements.
Kilminster agreed to settle at an early stage of the FSA’s investigation and therefore qualified for a 30% discount under the executive settlement procedures – without the discount the fine would have been £60,000.