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This ban should be a lesson to us all

The news last week that a broker has been banned by the Financial Services Authority from performing any function in relation to a regulated activity will sound alarm bells across the industry.

The ban was for non-disclosure of a criminal offence on the FSA application form to be an approved person. There is a strong undercurrent of feeling that this case is not an isolated one and that a number of similar stories are not far off.

Call it what you will – a momentary lapse of reason, an oversight or just plain dishonesty – when completing critical documentation, nobody should kid themselves into thinking that the FSA will not find out the truth at some point.

The next question should be, how long does it take to find out the truth?

There is a case for the regulator to make the correct enquiries at the time of application to establish the facts about an approved person. You can see the arguments in defence of the FSA. High levels of registrations, especially in the autumn of 2004, meant that such checking was not possible.

But if the applications from those applying for approved person status – those who regulation sought to keep out of the market – were given the green light due to the lack of veracity on their applications, this sends out a negative message. If you can get away with it, try it.

The FSA can’t help what has happened in the past and its push to remove those who have been less than honest is welcome. This should not be delayed a moment longer.

The principles of honesty, high standards and fiduciary responsibility should not only be embraced by all but be at the core of a regulated market. There will be those reading this that counter with something along the lines of ‘there are two sides to every story’, but that does not wash with an important issue like this. How we as an industry are seen by the outside world is important to our personal and business reputations.

In the case above, there was always the option for the individual to disclose material information at the outset and find out where they stood. Their decision to omit key historical data is to my mind a throwback to the days before regulation. This culture is now outmoded and the industry should move on.

And those who have been banned where there is proven misrepresentation must be fined as well. Where is the disincentive if you only get struck off?

A fine in the region of £50,000 should be a big enough disincentive to anyone else thinking of trying a similar stunt – hopefully before they put pen to paper on their application form. Lender Interest Annualised Cost of borrowing £50,000 over:

rate rate 5 years 10 years 15 yearsJust Retirement5.99 5.99 £66,880 £89,458 £119,658Standard Life6.06 6.06 £67,101 £90,051 £120,849GE Life6.10 6.10 £66,555 £89,487 £120,319Simon biddle


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