Robert Shaw, former director of advisory firm TailorMade Independent Ltd (TMI), has been banned from senior positions in financial services and fined £165,900 by the Financial Conduct Authority (FCA).
The FCA found Mr Shaw failed to ensure that TMI assessed the suitability of investments made through self-invested personal pensions (SIPPs) for its customers, and failed to ensure that TMI identified and managed its conflicts of interests.
Georgina Philippou, acting director of enforcement and market oversight at the FCA, said:
"Robert Shaw exposed customers to risky investments without considering if these products would meet their needs. In addition, he personally benefitted from sales of these products without revealing to customers the full extent of the benefits he received. His actions mean that many customers faced losing all of their hard earned pension funds. This is not the conduct we expect of senior individuals."
The FCA found that Mr Shaw benefitted financially from being the director and shareholder of TailorMade Alternative Investments (TMAI), an unregulated introducer, which referred clients to TMI. The financial benefit he received created a conflict of interest with his duty to TMI’s customers to run the business compliantly. These payments created a conflict of interest and so should have been identified, and then disclosed to customers. However, no adequate disclosure was made.
The issue was compounded by Mr Shaw’s failure to act when TMI’s external compliance consultants warned it of the need to consider and disclose conflicts of interest to customers.
TMI provided advice to customers on transferring their existing pension funds into unregulated investments such as green oil, biofuels, farmland and overseas property via SIPPs. Between 2010 and 2013, 1,661 customers invested £112,420,985 in these investment products, many of which were not typically permitted by their existing pension schemes. More than half of the affected customers invested in overseas property operated by the Harlequin group of companies, which are under investigation by the Serious Fraud Office.
As a director with responsibility for the management and oversight of TMI, Mr Shaw should have ensured that TMI considered the suitability of the investment products for customers but he failed to do so.
TMI has ceased trading and is now in liquidation. The Financial Services Compensation Scheme (FSCS) is investigating claims made by TMI’s customers - customers concerned they may be affected should contact the FSCS on 0800 678 1100. The FCA has undertaken extensive work on SIPPs, and wrote to the CEOs of all SIPP firms in 2014 asking them to take action to ensure that their business operates within FCA rules.
Notes to editors
- The Final Notice for Robert Shaw.
- Information on how to contact the FSCS.
- Robert Shaw agreed to settle at an early stage of the investigation, and received a 30 per cent discount. Without this Mr Shaw would have received a fine of £237,040.
- The FCA found that Robert Shaw breached Statement of Principle 7 of its requirements for approved persons, and was not fit and proper to carry out any significant influence function in relation to any regulated activity carried on by any authorised person, exempt person or exempt professional firm.
- The FCA has undertaken a number of enforcement actions against individuals for SIPP advisory failings, including Timothy Hughes and Andrew Rees of 1 Stop Financial Services and Peter Legerton and Lloyd Pope of TMI.
- Information on investments made through the Harlequin group.
- The FCA reviewed SIPP operators in 2014. The FCA found that, despite previous warnings, some firms are still failing to fulfil their regulatory obligations. Many firms were found not to have the necessary expertise to assess high risk and non-standard investments and often failed to understand and identify the correct prudential rules which apply to their business. The FCA has written to the CEO’s of all SIPP firms to warn them of the failings
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA). On 1 April 2014, the FCA took over responsibility for consumer credit regulation.
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.