Tag Archives: sales practices

Towry claims branded ‘unsustainable’ as case dismissed (Article by Sam Macdonald in Fundweb on 15.02.2012)

15 Feb

The High Court has dismissed all claims brought by Towry against Raymond James and seven former Edward Jones advisers, with the judge branding them “unsustainable” and “entirely without foundation”.


Andrew Fisher

Andrew Fisher

In a damning criticism of the case heard at the Royal Courts of Justice in London last July, Mrs Justice Cox roundly rejected the claims made by Towry that Raymond James had encouraged or been reckless in allowing Wayne Hayhurst, Tracy Simpson, Tom Spain, James Chandler, Barry Bennett, Pieter Burger and Stuart Hutton to breach non-solicitation clauses in contracts which prevented the former Edward Jones advisers from contacting the clients for up to 12 months.

Towry brought the case in April 2010 after 388 clients with assets totalling £33m transferred to Raymond James. Towry also alleged Raymond James and the advisers had “conspired” with each other in some instances to breach their Edward Jones contracts.

Raymond James and the advisers argued Towry had provided no evidence of unlawful solicitation and allowed only seven days for new employees to agree contract terms before withdrawing any employment offer.

In her judgment handed down on Tuesday, Mrs Justice Cox said: “Having regard to the whole of the evidence in this case, the allegations against Raymond James do not withstand scrutiny.

“There is no evidence to support a suggestion that Raymond James deliberately set out to induce a breach of contract by any individual defendant. The suggestion that Raymond James either knew or was reckless as to whether any defendant was going to solicit any client is in my view unsustainable, as is the suggestion that they closed their eyes to the obvious.”

On the claim that the advisers were conspiring to breach their contracts, she said: “I reject as entirely without foundation in this case, the allegation that the conduct of the individual defendants prior to leaving their employment with Towry was consistent with a ’pre-existing plan’ to poach Towry’s clients.”

 The judge awarded total legal costs against Towry of £1.2m. Towry had sought damages of £5.9m.

Law firm Faegre Baker Daniels, representing Raymond James, says the costs represent the severity of the allegations. Litigation partner Robert Campbell says: “All the claims against all the defendants were dismissed and the judge made the most generous cost offer she is able to do.”

Peter Moores, chief executive of Raymond James, says: “The judgment confirms the advisers did not breach their restricted covenants, that there was no misuse of confidential information and there was no conspiracy to injure Towry EJ.”

Andrew Fisher, chief executive of Towry, says: “We did not undertake this action lightly but to protect our legitimate business interests for our clients and shareholders.”

FSA fines Derbyshire firm £97,600 over UCIS Failings (Article by Bob Langstone in MoneyMarketing on 15.02.2012)

15 Feb

The FSA has fined Derbyshire firm Topps Rogers £97,600 for failings related to its unregulated collective investment schemes.

The fine was imposed for failings relating to the FSA’s management and control and relationship of trust principles.

It has also cancelled its Part IV permission, meaning the firm is no longer directly authorised.

According to the regulator, Topps Rogers conduct fell below the “standards and requirements of the regulatory system”, specifically those in connection with its investment business between 2004 and 2010.

It says the firm failed to take “reasonable care to ensure that its recommendations relating to Ucis were suitable for its customers”.

The regulator says there were a number of failings relating to the promotion and recommendation of Ucis.

The firm was also alleged to have failed to put adequate compliance arrangements in place.

The regulator claims the firm promoted and advised 94 customers to invest more than £12m in Ucis, directly or through a Sipp or wrap platforms.

“A number of Ucis that Topps Rogers’ customers invested in have been suspended or wound up, resulting in potential financial losses for customers,” the regulator reports.

“The situation was aggravated by the fact that customers were advised by Topps Rogers to invest large proportions of their investment portfolios in Ucis. In some instances, customers were not aware that they had invested in Ucis or of the associated risks.”

The regulator had earlier withdrawn the approval of Martin Rigney, “the only adviser and partner” at Topps Rogers, prohibiting him from performing any regulated activity “on the grounds that he is not a fit and proper person”, which has been deferred to the Upper Tribunal (Tax and Chancery Chamber).

Rigney had been approved to perform a number of functions since 2002, with the firm having voluntarily modified its permission to stop arranging new business connected with Ucis in 2009.

The firm later varied permissions to prevent it from carrying on any of the regulated activities in its permission in 2011, before it was put into liquidation later that year.

The fine consists of a punitive element of £70,000 and disgorgement of financial benefit of £27,600, relating to commission payments on “obtained by Topps Rogers for arranging eight unsuitable Ucis sales”.

Financial Ombudsman Service rules against bank’s advice over AIG fund (Article by Daniel Grote in New Model Adviser on 10.02.2012)

10 Feb
FOS rules against bank's advice over AIG fund

The Financial Ombudsman Service has found in favour of a bank client who complained about advice to invest in investments from failed provider AIG.

In a provisional decision published by the Ombudsman, it found in favour of the unnamed clients, who invested £3.2 million in the AIG Enhanced fund and later argued the investment did not match their risk appetite.

Chief ombudsman Tony Boorman said: ‘In respect of Mr and Mrs V’s investment objectives at the time… the primary objective was for short term reasonable return but secure cash investment. They did not wish to take risks with this money. In simple terms they were ‘no risk’ customers – not ‘low risk’.’

‘To an experienced financial adviser and to a business like Bank D, these investments would not – and should not – have appeared to represent a risk-free approach, nor would they have been suitable for investors looking to invest in cash, or for investors looking for instant access who were not prepared to accept the possibility that they might have to wait to access their money.’

‘It was important for advisers to take these things into account when assessing the suitability of the product for an individual investor, and for potential investors to understand that the fund presented more risk than an ordinary cash fund. And Bank D should have identified those risks and taken them into consideration when recommending the investment to Mr and Mrs V.’

FSA Shuts Down Sale and Rent-Back Market – by Natalie Thomas

3 Feb

3 February 2012 10:43 am | By Natalie Thomas


The FSA has today published a report that shows most sale-and-rent-back transactions were either unaffordable or unsuitable and never should have been sold.

Following a review of all regulated rent-back firms, the FSA has referred one firm to its enforcement division while others have either stopped taking on new business or cancelled their permissions.


The FSA says effectively, this means the entire rent-back market is temporarily shut.

Of the 22 firms reviewed, only nine had been active since the FSA began regulating rent-back.

Of this nine, five firms have now stopped doing rent-back business, three have kept their regulatory permissions but decided not to use them for the foreseeable future, five have agreed to undertake past business reviews (which may result in consumer redress), and one will only purchase second-hand SRB contracts from other firms.

The FSA says if customers with existing SRB agreements have concerns about their agreement they should in the first instance contact their SRB provider, or seek professional advice.

The FSA had previously identified and published areas of concern regarding financial promotions targeting vulnerable consumers. It had also received intelligence from a lender alleging that one firm was arranging rent-back transactions as buy-to-let mortgages where the properties were purchased by the firm at below market value then inflating purchase prices to defraud the lender.

Additionally, a study by consumer group Which? in February 2011 found advice to rent-back customers to be ‘woefully inadequate’.

In March 2011, the FSA commenced a review of the sales practices of the 22 authorised SRB firms. The most common failings identified by the FSA were:

  • SRB firms did not correctly assess appropriateness and affordability, and customers were not given enough time to consider the agreement;
  • Disclosure of the key facts of an SRB agreement did not follow the correct order, was insufficient and not given at the right time;
  • agreements contained incorrect information and did not meet the FSA’s requirements for tenancy agreements;
  • Sales processes were inadequate and did not allow firms to gather enough information to assess appropriateness;
  • Financial promotions breached FSA rules; and
  • Training and competence, compliance monitoring, and record keeping were all inadequate.

The FSA will now focus on working with firms conducting past business reviews to ensure any affected customers are treated fairly.

FSA head of mortgage and general insurance supervision Nausicaa Delfas says: “Rent-back is often the last resort for struggling homeowners so we expected to see firms treating their customers much better than this report suggests.

“The resulting temporary closure of this market could have been avoided if sale and rent back firms had taken the time to fully understand their regulatory responsibilities and customers’ needs. It seems most were more focussed on their own commercial success rather than the welfare of the customers, with one firm even resorting to fraud.

“This is an example of the type of action that the FSA, and in future the FCA, will increasingly be taking to protect consumers.”

The FSA was given regulatory oversight of SRB by HM Treasury in June 2009 and implemented an interim regime a month later. This was replaced by a full regime in June 2010