On Tuesday, the Tribunal upheld the Financial Conduct Authority’s (FCA) decision to impose a ban and financial penalty of £86,691 ($112,816, €95,717) on Charles Palmer for failing to act with due skill, care and diligence in carrying out his role of director and de facto chief executive of two firms.
Palmer was the majority shareholder and chief executive of Standard Financial Group Limited, which consisted of advisory network of two firms, Financial Limited and Investments Limited, of which Palmer was also chief executive.
Inherent risk of bad advice
The network operated nationally and, at its peak in March 2011, consisted of 397 appointed representatives (AR) and 516 registered individuals (RI).
Between 24 February 2010 and 20 December 2012, advice was given to approximately 40,000 customers.
The FCA, in handing down the ban, said that the actions of the firm created an inherent risk that underlying customers would receive unsuitable advice.
Given his position, the FCA stated that Palmer was the primary controlling influence of the two firms and was responsible for developing and maintaining their business models.
The regulator said the business model offered high levels of flexibility and freedom to the ARs and RIs, thereby increasing the inherent risk that underlying customers would not be treated fairly and gave rise to material risks to underlying customers.
In his appeal, Palmer contended that he was not personally culpable for the failing of the firms and that other members of the company were responsible for risk management and compliance controls.
Inadequate response
The Tribunal agreed with the FCA that Palmer’s failings were particularly serious in the light of findings made against him by the FCA’s predecessor, the Financial Services Authority (FSA), and his failure to respond to the shortcomings outlined in a Final Notice.
The notice was issued on 24 February 2010 and stated that Palmer had failed to take reasonable steps to ensure that Financial Limited’s business was organised in such a way that it could be controlled effectively.
It also cautioned that individual advisers were not fit for purpose and would negatively impact the fair treatment of customers.
No lessons learned
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Mr Palmer’s conduct fell well below the standards the FCA would expect of a senior manager of an authorised firm.
“His conduct was made worse by the fact that he did not learn lessons from, and address the failings highlighted to him in, 2010.”
Palmer can still take his fight to overturn the ban to the Court of Appeal.
