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The Financial Services Authority (FSA) has today fined two former directors of Alpha to Omega (UK) Limited (A2O), an Independent Financial Adviser network.

The two directors, Andrew Ruff and Richard Lindley, have been fined £28,000 and £14,000 respectively for widespread compliance failings which led to the risk of customers receiving unsuitable investment advice. Andrew Ruff has also been banned.

In March 2009, the FSA undertook a review of some customer files of an appointed representative of A2O. As a result of that work, A2O was required to appoint a skilled person to review the compliance systems at A2O. The skilled person highlighted widespread compliance failings at the firm which led to the risk of customers receiving unsuitable investment advice. This was particularly problematic where customers had been recommended high risk investments such as certain Unregulated Collective Investment Schemes (UCIS schemes).

A2O agreed to stop its appointed representatives recommending a number of UCIS schemes. However, A2O failed to make the necessary improvements to its compliance systems and on 18 January 2010 FSA required A2O to cease conducting all regulated activities.

Ruff and Lindley have been fined because:

• they were responsible for the control and monitoring of the sales made by A2O’s appointed representatives and failed to do this effectively;
• they failed to ensure systems and controls weaknesses were addressed and they lacked control and oversight over the network of advisers which led to the risk that its appointed representatives were not offering suitable advice and treating customers fairly;
• A2O failed to collect relevant and accurate management information to enable them to adequately identify, monitor and mitigate the compliance risks to which the business was exposed; and
• they failed to take appropriate action to correct the behaviour of appointed representatives when they became aware of potential compliance risks.

Ruff has been banned as he was primarily responsible for the compliance arrangements at the firm. He failed to ensure that A2O had adequate compliance monitoring procedures in his role as Compliance Director of A2O.

Tracey McDermott, acting director of enforcement and financial crime, said:

''Lindley and Ruff shared the ultimate responsibility for ensuring the financial advice provided by their network of advisers was suitable for their clients. They both failed in their responsibilities and this resulted in unsuitable advice being provided to some clients.

''Those who oversee networks of appointed representatives need to ensure that they keep a close eye on the advice being given throughout their network, especially where the advice includes high risk products such as UCIS. If there are failings in the way customers are treated anywhere in the network, the principals will be held to account.''

Notes to Editors

1. Read the Andrew Ruff and Richard Lindley Final Notices.
2. A2O (Firm Reference Number 214100) was an Independent Financial Adviser network authorised by the FSA in March 2003. A2O entered administration on 25 January 2010 and is now in liquidation. It had 47 appointed representatives which employed a total of 101 advisers.
3. As a result of the FSA’s concerns about the suitability of the recommendations provided by an AR of A2O, the firm was required to commission a skilled person’s report to establish A2O’s standards of compliance oversight and corporate governance. As a result of those findings, and concerns with the Firm’s proposals for remedial action, the Firm’s permissions were varied and on 18 January 2010 the FSA issued a Supervisory Notice requiring A2O to stop conducting all regulated activities for which it held permission.
4. UCIS are high risk products and it is essential firms have appropriate systems and controls to avoid them being sold to customers for whom they are unsuitable. The failings of Ruff and Lindley resulted in the inappropriate promotion of unsuitable high risk products to retail clients.
5. Ruff was A2O’s Compliance Director. He was approved to hold CF 1 (Director), CF10 (Compliance Oversight) and CF11 (Money Laundering Reporting) controlled functions at A2O from 26 March 2003 to 5 January 2010. These controlled functions are significant influence functions.
6. Lindley was A2O’s Managing Director. He was approved to hold the CF1 (Director) controlled function at A2O from 26 March 2003. This controlled function is a significant influence function.
7. The FSA’s Retail Conduct Risk Outlook 2011 identified that the control and oversight that networks exert over their appointed representatives is a key emerging risk in relation to firms’ business models and behaviours, particularly where the business strategy emphasises moving into new product areas. It also identified UCIS as an emerging product risk, as it appears that UCIS are increasingly being sold to customers who are not eligible or appropriate for this type of investment. This is the fifth case the FSA has involving unsuitable advice to customers in relation to UCIS products.
8. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.