The financial advice wing of RSM Tenon was fined £700,000 by the Financial Services Authority (FSA) for failings in its advice and sales processes relating to products from the failed US investment bank Lehman Brothers.
By agreeing to an early settlement RSM Tenon Financial Services gained a 30% reduction in its penalty, which would have amounted to £1m.
Between November 2007 and August 2008, the FSA ruled, Tenon failed to treat some of its customers fairly and breached the regulator’s principles by failing to take reasonable care to organise and control its affairs responsibly and effectively, and failing to ensure the suitability of its advice to its customers.
The FSA investigation found that the firm failed to have effective risk management systems in place and allowed unsuitable sales pitches to take place. The risks associated with Lehman’s structured products were not adequately assessed to ensure advisers considered those risks when providing advice to customers. Nor did the firm adequately monitor the promotion of those products.
Following the regulatory action, RSM Tenon Financial Services will undergo a series of conduct a past business reviews and implement a customer redress programme, if required.
A “skilled person” will also be instructed to review its current sales and compliance processes relating to the sale of all investment products.
FSA director of enformcement and financial crime commented: “This is the first action we have taken for advice failings relating to Lehman-backed structured products following our recent review, and we acted swiftly and decisively in order to return money to investors as quickly as possible. We will continue to take tough action where we find evidence that firms are giving unsuitable advice to investors.”