A FINANCE firm based in Huddersfield has been hit with a £6m fine.
Sesame, based at Lindley, is one of the country’s largest financial service networks.
But it has been fined the huge sum by the industry regulator after its advisers mis-sold risky financial products to investors and pensioners.
Clients of Sesame, which is based at Holly Bank where 140 people are employed, were among tens of thousands who lost out when investment firm Keydata – which used customer cash to buy bonds funding the purchase of bundles of US life insurance policies – collapsed in 2009.
Now the Financial Conduct Authority (FCA) has fined Sesame for its advice in relation to Keydata products, as well as wider problems in its systems.
It found failures in ensuring suitable advice was given to Sesame’s customers and in the way its appointed representatives (ARs) were overseen by the company, even after the collapse of Keydata.
The Financial Conduct Authority (FCA) fined the Huddersfield-based companies, which supports 1,200 independent financial advisers (IFAs), £245,000 for providing unsuitable advice on investments from Keydata, which collapsed four years ago amid a regulatory inquiry into its affairs.
A total of 426 consumers invested £6.1 million in the Keydata bonds, some of which were revealed to have been the subject of fraud, although the Serious Fraud Office later dropped its inquiry into £103 million of missing money.
On top of this the FCA fined Sesame a further £5.8 million for wider problems with the company’s systems and controls.
The regulator said the ‘vast majority of Sesame’s sales were flawed’ as there was a mis-match between the consumers’ investment objectives and attitude to risk compared with the product sold.
Tracey McDermott, FCA director of enforcement and financial crime, said as one of the UK’s largest networks overseeing 1,220 advisers it described itself as ‘perfectly placed to deliver expert guidance and services’ but ‘the failings in this case fall far short of that’.
“The weaknesses in Sesame’s systems and controls show that there was an ongoing risk that unsuitable advice could be given by Sesame’s authorised representatives.
“By allowing authorised representatives to use their regulatory permission to operate, principals are effectively vouching for them. Therefore they must keep a close eye on what their authorised representatives do and keep them up to date with the regulator’s expectations. Critically, they must also act decisively when things go wrong. Sesame failed on all these counts.”
George Higginson, chief executive of Sesame Bankhall Group, 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. ”
