But it seems to me that most of the cases involve individual brokers and small firms. But where are the cases involving rogue brokers working for appointed representatives or even AR firms themselves?
Directly authorised brokers can be banned from the industry but it’s a different story with those working for ARs. The FSA can’t take direct action against them and ARs don’t have the power to ban anyone.
As I see it, the only thing ARs can do is provide poor references. So in practice, the regulator can only act against DA brokers.
This is not just wrong, it’s grossly unfair too and represents a significant risk to consumers.
There’s no doubt that the current system fails to adequately protect the public from fraudulent brokers working for ARs because the FSA does not record data about them.
If a firm has a bad apple it has concerns about, why bother going through the hassle of attempting to report them?
It would look bad on its records. All the firm has to do is invite said individual to resign, provide them with a reference and pass the problem onto someone else. As a result consumers are none the wiser.
On the FSA register there is no way to find individual brokers working for ARs and the level of information on them is inadequate.
We need a compulsory system that records all investigations of wrong-doing by brokers that can be scanned by prospective employers. These records should form part of a reporting regime to protect clients from rogue operators.
Many brokers I know of working for ARs have the attitude that the FSA will only inspect records at head office and won’t bother going to see them.
If the regulator really wants to know what’s going on it needs to inspect not only the ARs but also the brokers that work for them. But I suspect this could be another Pandora’s box for the industry to open.
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