Two brokers, Wills & Co and Direct Sharedeal (‘DS’), both met with FSA actions in February and there has been a large amount of publicity about both cases. Common to both was unacceptable or high pressure sales tactics in respect of higher risk securities to clients (and numerologists will be interested to learn from the 19 page DS Final Notice that the FSA reviewed sales calls to 19 clients, whilst the 19 page Final Notice of Darren Lansdown of Wills & Co tells us that the FSA reviewed 19 transactions there, ).
A particularly novel sales tactic in the Wills & Co case was the reference to the COBS rule which recommends that customers should hold up to 10% of their investment portfolio in high risk securities. When challenged by the FSA in June of last year the firm admitted that they couldn’t identify the rule (and nor could anyone else) but despite this Wills & Co continued to refer to this ‘rule’ even after June in correspondence with the FOS (section 4.36 of the Final Notice against Katharine Prichard (who’s FCA Reference Number ends in 19 too) refers). Of note to Compliance Officers: both the Compliance Director and the Sales Director received similar censure although the former will not hold a significant influence function for 5 years, compared to a 3 year period for the latter.