Mr Andrew Rees and Mr Timothy Hughes, partners at 1 Stop Financial Services (1 Stop), have been banned by the FCA from performing any significant influence function in relation to any regulated activity. Mr Rees and Mr Hughes had advised customers to switch into self-invested personal pensions (SIPPs), which enabled those customers to invest in unregulated and often high risk products, regardless of whether those products were suitable for the customers.
Between October 2010 and November 2012, 1 Stop advised nearly 2,000 customers on switching their existing pensions (valued at in excess of £112m) into SIPPs. Their customers then used the SIPPs to invest in products such as diamonds and overseas property which were typically not permitted by the customers’ existing schemes. In breach of Statement of Principle 7, the partners failed to take reasonable steps to ensure that the business of 1 Stop complied with the relevant requirements and standards of the regulatory system. Specifically, they failed to take reasonable steps to ensure that 1 Stop assessed the suitability of the underlying investment for the customer. Instead, 1 Stop’s business model focussed solely on providing advice on the most suitable SIPP wrapper for the underlying investment.
The pair were fined £490,100 but reached agreement with the FCA to pay that amount to the Financial Services Compensation Scheme, which is investigating redress claims by 1 Stop clients. In addition to the fine, the FCA also withdrew the approvals granted to Mr Rees and Mr Hughes and made an order prohibiting both partners from performing any significant influence function in relation to any regulated activity carried on by any authorised person, exempt person or exempt professional firm. 1 Stop has now ceased trading and has applied to cancel its FCA permissions.
View Final notice: Timothy Adrian Hughes, 17 April 2014
View Final notice: Andrew Charles Rees, 17 April 2014