Noble Lowndes fined pounds 740,000 over investment abuses: Imro imposes near-record penalty for 'systematic churning and switching' of customer money by firm's consultants

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The Independent Online
NOBLE LOWNDES, a leading firm of pension consultants and financial advisers until recently owned by the TSB Group, was yesterday fined pounds 740,000 for allowing the 'systematic churning and switching' of the investments of at least 225 customers.

The firm will also have to pay compensation that has already reached pounds 580,000, although the investigation of the problems is still continuing, hampered by inadequate record-keeping. The firm will also have to pay the pounds 45,000 costs of its regulator, the Investment Management Regulatory Organisation.

The size of the fine marks the extreme seriousness with which Imro regards the firm's failings. The fine is only pounds 10,000 less than the record penalty imposed in June on Invesco MIM, the fund manager that admitted 55 rule breaches including three in connection with the plundered Mirror Group pension scheme. The financial services industry is already under sustained regulatory attack over personal pension transfer business, where the compensation bill is expected to run into hundreds of millions of pounds.

Sir Nicholas Goodison, chairman of TSB for much of the time when four Noble Lowndes consultants were cheating investors, is a member of the high-powered committee advising regulators on the pension transfers scandal.

TSB will have to pay the cost of the fine and compensation, as it agreed in August when it sold Noble Lowndes for pounds 110m to Sedgwick, the insurance broker.

The abuses at Noble Lowndes go back to May 1988 and were missed by Imro when it carried out an inspection in 1990. Noble Lowndes contacted Imro after it had itself uncovered the irregularities.

Four consultants of the firm's personal financial advisory arm systematically encouraged 225 investors unnecessarily to switch life insurance and unit trust investments to other companies. No pensions business was involved. The same four, who included experienced consultants, also gave other unsuitable advice to at least 115 investors.

Imro found that bad record-keeping was widespread among Noble Lowndes' 240 consultants. The firm admitted failing to maintain effective compliance procedures.

Sedgwick has replaced Noble Lowndes' management since it took over, installing David Strauss as chief executive instead of Karl Daniels. Imro said the firm's new owners had demonstrated their intention 'to maintain the highest levels of compliance in the future'.

Mr Strauss gave an assurance that no client would suffer financial loss because of the regulatory breaches. He said Noble Lowndes had advised tens of thousands of clients in the period when the abuses took place and only a very limited number of consultants was involved.

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