FCA eyes director ban over alternative investment advice

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The FCA is seeking to ban former Tailormade chief executive Alistair Burns and fine him £233,600 for alleged pension transfer suitability failures.

Between January 2010 and January 2013, Tailormade gave advice to customers who were considering transferring or switching their existing pension funds via Sipps into unregulated investments, such as green oil, biofuels, farmland and overseas property.

In the FCA’s view, Burns failed to ensure that Tailormade provided suitable advice to its clients. Burns also failed to ensure that the business managed fairly and clearly disclosed his own personal conflicts of interest and the conflicts of interest relating to other individuals at Tailormade, the FCA argues.

1,661 customers invested £112,420,985 in alternative investments over the period. In the FCA’s view, the personal recommendations process used to advise customers, for which Burns was jointly responsible, was inadequate.

The regulator also says Burns received significant financial benefit through his position as a director and shareholder of an unregulated introducer also operating under the ‘Tailormade’ name, which referred clients to Tailormade Independent. The FCA says the financial benefit he received created a conflict of interest.

As of September 2016 the Financial Services Compensation Scheme has upheld 919 claims of unsuitable advice against Tailormade, with compensation of more than £40m paid to date.

More than half of the affected customers invested in a firm specialising in overseas property which later went into liquidation with all of the investments lost.

The FCA published its decision notice today. Burns will appeal the fine and ban at the Upper Tribunal.