The Financial Conduct Authority (FCA) handed warning notices to three senior managers at an unnamed discretionary fund manager on 17 February 2023.
The UK regulator said it considers that the individuals breached Principle 1 (integrity) and Principle 6 (due skill care and diligence) of the FCA’s Statements of Principle for Approved Persons (APER) when carrying out their controlled functions.
The FCA believes that the individuals were “involved in a coordinated arrangement that was in place at the firm that led to customers suffering financially, whilst the firm benefited”.
“A business model was set up that was intended to maximise the flow of retail customer funds for onward investment into high-risk illiquid bonds operated by connected persons and business associates,” the regulator added.
“This model was driven by the financial benefit that the firm derived from commissions.”
The FCA said that Individual A (holding the director, systems and controls, and customer controlled functions), Individual B (holding the compliance oversight and money laundering reporting controlled functions), that Individual C (holding director and chief executive controlled functions), in the period January 2016 to August 2019, all failed to act with integrity and failed to act with due skill, care and diligence.
The warning notice is not the final decision of the FCA. The unnamed firm has the right to make representations to the Regulatory Decisions Committee (RDC) which, in the light of the representations, will decide on the appropriate action and whether to issue a decision notice.
