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FSA bans director for acting recklessly

The Financial Services Authority has banned Worcestershire financial adviser Norman Mark McCance for failings related to quality and suitability of advice and compliance at his firm, Penn Financial Services Unlimited.

Penn’s main business was investment bonds, but the FSA found that McCance lacked competence and capability and on occasions acted recklessly when advising clients to remortgage to raise funds to invest.

As Penn’s sole director he also failed to ensure that the firm met FSA compliance standards.

The FSA says McCance as an adviser acted recklessly in arranging transactions which could not be justified in terms of suitability, particularly in relation to advising customers to re-mortgage to raise funds to invest in investment bonds which were unlikely to generate sufficient income or capital to repay the mortgages.

He also acted recklessly in providing written loss guarantees to individuals who complained about the performance of their investment bonds, thereby deterring them from pursuing complaints about their investments;

As well as failing to record sufficient and accurate information about customers’ personal and financial circumstances for assessing the suitability of recommendations; completed mortgage applications with inaccurate information and conducted pension transfers outside the scope of Penn’s permission.

McCance as director of Penn failed to put in place adequate and effective compliance arrangements over the firm’s business, monitor and/or review the firm’s business by undertaking compliance checks. He also failed to improve the firm’s compliance resources despite recognising these were inadequate.

Jonathan Phelan, head of retail enforcement at the FSA, says: “It is vital that Approved Persons demonstrate the necessary degree of competence and capability when providing investment advice and overseeing compliance by a firm. Those who do not demonstrate the necessary degree of competence and capability face the risk of being prohibited from the financial services industry.”

The FSA has also cancelled the permission of Penn.

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