Enforcement
Restrictions have been placed on wealth management firm London Stone Securities after the FCA voiced serious concerns about the delivery of client outcomes. This means the firm cannot undertake any regulated activity, charge any further fees to existing clients or take on new clients without the regulator’s express permission. The firm was also required to withdraw all financial promotions and keep assets in the business.
Concerns include the charging of fees that appear to be excessive, unjustified fair value. Charges were not communicated or explained with all clients in advance.
The FCA says some of the firm’s client base “have characteristics of vulnerability” , and it is concerned the firm may have “directly targeted clients who were elderly, disabled and vulnerable.
In addition, inconsistencies have appeared in information the firm provided to the FCA. For example, it said the maximum charge applied to any client was 5% of their portfolio value, but charges far in excess of that figure have been found. In some cases fees amounting to 65% of portfolio value have been applied.
And, says the FCA: “The firm also transferred £1.3m from its bank account throughout the FCA’s ongoing enquiries. We believe the firm may not have communicated openly or honestly with us, their regulator.”
Lonsdale Insurance Brokers Limited has entered liquidation, with Neil Bennett and Alex Cadwallader of Leonard Curtis appointed as joint liquidators.
Peterson Okoh of Peckham, south east London, has been charged with advising on and arranging mortgages without being authorized to do so. He is said to have carried out the work between January 2018 and December 2023.
He appeared at Westminster magistrates court charged with three counts of fraud by false representation and one count of carrying on regulated activities without authorization.
Okoh has entered a plea of not guilty, and has been bailed on conditions of home residence, not carrying on as a mortgage adviser, and not contacting witnesses directly or indirectly.
The case has been sent to Southwark Crown Court for a Plea and Trial Preparation Hearing on August 28, 2024.
Rules and consultations
Next steps in the review of the use of discretionary commission arrangements (DCAs) in the automobile finance market will be set out by the regulator in May 2025. So the current pause in complaint handling has been extended to December 4, 2025.
A review into whether customers had been overcharged in past use of DCAs was announced in January. Next steps could involve consulting on a redress scheme.
Publications
A statement on the cold-shouldering of 10 individuals in relation to MWB Group Holdings has been published. The move comes after the Hearings Committee of the Takeover Panel produced Statement 2024/17.
Under MAR 4.3.2G, if a person is named in a ruling of the Hearings Committee as being a person who has been ‘cold-shouldered’, the regulator expects firms to comply with MAR 4.3.1R by not acting or continuing to act for that person.
A press release was issued detailing amendments to FCA rules and guidance to enable dormant investment assets and client money to be available to the Dormant Assets Scheme (DAS).
Speeches and media
One year on since the introduction of Consumer Duty, Sheldon Mills, executive director of consumers and competition, delivered a speech at an FCA event to mark the occasion.
He said there had been “many examples of positive and impactful changes,” listing quicker moves to increase savings interest rates after base rate increases, improvements to GAP insurance, and a big drop in ‘double dipping’ where firms made a return on interest retention as well as charging customers for the custody of cash.
That last change is estimated by the FCA to have put £10m ($12.8m) in fees back in customer pockets.
Mills also addressed the question of whether Consumer Duty protected consumers at the expense of growth and innovation. His view was that this should not be an either/or debate.
Priorities in this are over the next few months will be;
- acting to address harm, or potential harm, to retail customers;
- attaining greater understanding of how firms are embedding the Duty, the outcomes customers are getting, and where potential issues are emerging;
- sharing more information on good practice.