The Financial Conduct Authority (FCA) fined the company £1.68m after deciding the scheme undermined the ban on commission payments brought in by the Retail Distribution Review (RDR) by allowing its range of product recommendations to be influenced by the amount of services it had sold to providers.
“Firms must place customers at the heart of their business,” said Tracey McDermott, director of enforcement and financial crime at the FCA. “Our reforms were designed to ensure advice is based on what is best for the client not the adviser.”
“Firms can have had no doubt about the outcomes we were looking for here; Sesame’s approach to inducements, in the face of a clear position from the regulator, undermined the rules in order to look after its own interests,” she added.
She added that firms must focus increasingly on how they achieve the best outcomes for their customers rather than adopting practices that avoid regulation.
In response to the fine, Sesame executive chairman, John Cowan, said the company recognises the market changes introduced by RDR and should have been “more responsive” to the new environment.
“In January 2014, the leadership was changed and the new executive team has been implementing a new and more transparent policy, as well as building a robust operation that will serve customers better in the future,” he said. “This has led to significant improvements in our processes and controls, with customers’ best interests and quality outcomes placed firmly at the centre of all business decisions.”
In September, the Financial Ombudsmen Service revealed that Sesame received more complaints than any other advisory firm over the first half of 2014.
The advisory network, which is part of the Friends Provident group, was also the most complained about firm for the second half of 2013.
