FCA fines Sesame £6m
The regulator also imposed the fine for failings in the systems and controls that governed the oversight of its appointed representatives.
Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “Sesame is one of the largest and most well-known financial services networks in the UK responsible for the oversight of some 1,220 ARs.
“It describes itself as ‘perfectly placed to deliver expert guidance and services’ but the failings in this case fall far short of that.”
The penalty is made up of a £245,000 fine for Sesame’s advice failings in relation to Keydata life settlement products and a £5,786,200 fine for systems and controls weaknesses across its investment advice business.
The weaknesses in Sesame’s systems and controls show that there was an ongoing risk that unsuitable advice could be given by Sesame’s ARs.
McDermott said: “By allowing ARs to use its regulatory permission to operate, principals are effectively vouching for them.
“Therefore it must keep a close eye on what its ARs do and keep them up to date with the regulator’s expectations. Critically, it must also act decisively when things go wrong. Sesame failed on all of these counts.”
Sesame agreed to settle the case at an early stage of the investigation and therefore qualified for a 30% discount. Without the discount the fine would have been £8,616,000.
In response to the FCA’s disciplinary action Sesame has carried out a significant business change programme to improve its systems and controls, including a number of new appointments to its executive team and board.
It has also carried out a past business review to identify and provide redress to those customers who received unsuitable advice from Sesame leading to the purchase of a Keydata product.
George Higginson, SBG chief executive officer, said: “We regret these past issues and, in co-operation with the FCA, we have undertaken an immediate past business review to ensure that any customers who received unsuitable advice on Keydata products have been compensated.
“Through our multi-million pound investment in technology and improved systems and control framework, which includes the move to full file checking, we are working hard to ensure lessons are learnt and corrective actions implemented.
“The launch of our business change programme last September, with technology at its core, is already delivering tangible benefits and demonstrates our determination to continually strengthen our systems and controls.
“The executive team and I are fully committed to ensuring our advisers are delivering the right customer outcomes that can be clearly evidenced.
“This commitment is fully endorsed by the SBG Board. We have a long-term commitment to professional financial advice and I firmly believe the actions we are taking will put Sesame, our members and the consumers they serve in a stronger position moving forward.”