The FSA has fined three individuals at Pace Financial Management (Pace) in Sheffield for failures which led to the firm being used for financial crime.
Paul Armitage, Huw Evans and Brian Smith are all partners and approved persons of Pace, a firm of independent financial advisers and mortgage brokers, based in Sheffield. Armitage and Evans were fined £17,500 and Smith was fined £14,000 for failing to have appropriate systems and controls in place.
The partners failed to effectively supervise the other partners at the firm who had been delegated specific responsibilities such as the recruitment and supervision of employees. They also failed to effectively supervise mortgage advisers at the firm or to put in place effective file checking procedures enabling a fourth partner, who has since left the firm, to carry out financial crime with a mortgage adviser working for Pace (who then went on to work for a firm called Belmont Regency Limited (Belmont) in Derby).
The partners also failed to put in place an effective recruitment process, to enable an adequate assessment of the calibre of new employees, leaving the firm vulnerable to unsuitable individuals.
Belmont would also have faced a fine, but due to the financial difficulties the firm would have faced, the fine was not imposed. Belmont, a limited company with two directors, conducting personal investment business, was to be fined £17,500 for its system and control failures.
In January 2008, one of its advisers was arrested on suspicion of fraud that had taken place during the time he worked at Pace. He was placed under enhanced supervision by Belmont and subsequently dismissed in November 2008, when he was charged with fraud related offences dating back to the time he worked at Pace. The adviser was convicted in March 2010 of 15 fraud related offences.
No financial crime took place at Belmont but the appointment of a dishonest adviser was indicative of Belmont’s inadequate recruitment vetting, placing the firm at increased risk of being used for financial crime and of potential customer detriment.
Belmont failed to keep adequate records as to the training and competency of its advisers, and of the suitability of its advice, as well as failing to ensure that it adequately reviewed the competence of its advisers and the suitability of the advice they were giving. It also failed to have suitable procedures in place for recording training and competence of its advisers.
The FSA also had concerns regarding Belmont’s ability to ensure the suitability of its advice to its customers and found in some cases that it failed to adequately record and update customer information.
Margaret Cole, director of enforcement and financial crime at the FSA, said: “By lacking the essential systems and controls to meet the FSA’s standards
