BRITAIN’S largest network of financial advisers was fined another £1.6m this week for trying to side-step a ban on inducements in an industry beset by misselling scandals.
Sesame, which has now been fined four times by the regulator since 2004, operates a network of financial advisers that offer a restricted service from pre-selected providers.
But it picked its providers on the basis of additional services they were prepared to buy from Sesame’s companies, the Financial Conduct Authority (FCA) said.
This so-called “pay to play” arrangement breached its duty to act in its clients’ best interests, was not properly disclosed to customers and risked distorting the advice Sesame’s customers received, the FCA said. In one case, Sesame asked one product provider to increase the amount it had budgeted for to pay for Sesame services by £750,000 per year from 2014 to 2016.
The Government banned companies from paying commissions or inducing advisers to sell retail investment products in December 2012.
“Sesame’s approach to inducements, in the face of a clear position from the regulator, undermined the rules in order to look after its own interests,” said Tracey McDermott, the FCA’s head of enforcement and financial crime.
“If we are to move on in financial services we must see firms focusing on how they achieve the best outcomes for their customers – not adopting practices that avoid our rules.”
Sesame executive chairman John Cowan said a new executive team brought in this year had put in place a more transparent policy that would serve customers better in the future.
But he said: “As the market leader, we should have been more responsive to the wind of change blowing through our industry.”
Sesame, which has around 2,100 advisers advising customers on retail investment products such as pensions, annuities, savings and investments, cooperated with the FCA investigation and therefore qualified for a 30 per cent reduction in the fine.
It would otherwise have been fined £2.28m – a reflection on the group’s previous disciplinary history and failure to improve its record of compliance.
Sesame has previously been fined a total of £6.65m for, among other things, failing to ensure it was offering suitable advice and failing to adequately monitor the selling practices of an adviser within its network.
The company is a subsidiary of the Friends Life Group and is based in Surrey.