The Financial Services Authority's (FSA) enforcement machine marched on yesterday, slapping a £290,000 fine on the UK's largest network of independent financial advisers.
The Financial Services Authority's (FSA) enforcement machine marched on yesterday, slapping a £290,000 fine on the UK's largest network of independent financial advisers, Sesame, for wrongly advising its customers to withdraw cash from their pension funds early.
The fine - the regulator's 19th this year, taking the total past £22m for 2004 alone - was levied for advice given between August 1999 and May 2001, affecting about 3,200 customers.
In a statement yesterday, the FSA said the customers involved were not warned of the effect that prematurely withdrawing money from their pension - so called "pension unlocking" - would have on their retirement income. It added that the fine would have been considerably greater had the firm not co-operated fully with the investigation.
Andrew Proctor, the FSA's head of enforcement, said: "Sesame allowed its appointed representatives to release cash from consumers' pensions with insufficient regard to the impact this would have on their income.
"The more cash that was released, the more the consumer's pension contributions benefited the firm rather than the consumer. Little consideration was given for the substantial drop in the consumer's pension income or their inability to make up that loss as they were so close to retirement."
In response to the FSA fine yesterday, Sesame's chief executive, Patrick Gale, said: "The fine and the actions announced today relate to past issues that we very much regret. We have co-operated fully with the FSA and have now put in place a proactive customer identification and compensation programme, as agreed with the FSA. We are committed to ensuring the highest standards of supervision and compliance going forward."
Sesame, which was created last year and is a wholly owned subsidiary of Misys, the financial services group, plans to float on the London market once the FSA's new rules governing the financial advice sector - known as "depolarisation" - have been implemented.
Shares in Misys fell more than 3 per cent on the news yesterday, closing at 203.75p, giving the company a market valuation of £1.08bn.Reuse content