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Client ‘experience and expertise’: is it an effective defence against mismanagement allegations and damages claims?
In response to complaints about investment mismanagement and excessive losses, an easy and common defence for compliance departments is to allege that “the client was an experienced investor” and/or “knew what he was doing”. However, this defence should be used with extreme caution says Dr Brian Bloch. In the concluding part of his article (part one featured in the November 2003 issue) he examines the need to distinguish between experience and expertise and to ensure their relevance on a case-by-case basis.
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01 February 2004
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Vol 16 No 5 - 01 February 2004
Data essentials
A data management policy is essential for effective compliance argues Mike Pritchard of Centera Europe, EMC.
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01 February 2004
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Vol 16 No 5 - 01 February 2004
Regulating outsourcing from cradle to grave - the new FSA guidelines
Outsourcing and so-called ‘off-shoring’ have been big news in UK financial services recently. Firms are making increased use of these techniques to reduce costs and concentrate on core activities.The types of activities outsourced are becoming more complex and are no longer limited to call centres and back office operations. The FSA’s 2004 Financial Risk Outlook highlights this trend and the risks it may pose if the arrangements are not subjected to oversight and documented appropriately. The FSA regards business continuity arrangements and exit strategies as especially important. Brett Hillis of Denton Wilde Sapte examines the regulator’s latest thinking.
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01 February 2004
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Vol 16 No 5 - 01 February 2004
Consumers’ risk appetites – a hanging issue
What, asks Adam Samuel, is the hottest compliance topic for firms offering investment advice? The answer: risk. The Financial Ombudsman Service repeatedly refers to risk when discussing complaint cases. It is the primary ground for upholding endowment claims. It forms the basis of almost every complaint about zeros and the vast majority of other investment complaints. The problem simply put is that the product recommended does or did not fit the customer’s attitude to risk. Complaint handlers, says Mr Samuel, particularly at FOS, make this pronouncement with the severity of the old black-hooded judges sentencing murderers. How then is the adviser to avoid the noose?
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01 February 2004
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Vol 16 No 5 - 01 February 2004
Dishonesty and fraud
At last there is movement on fraud, the ‘other side’ of the FSA’s financial crime objective. With the money laundering and terrorist financing initiatives well in hand, in December 2003 the regulator published DP26..
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01 February 2004
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Vol 16 No 5 - 01 February 2004
SFI Group plc censured for breach of Listing Rules
The FSA admonished SFI Group plc, the pub and restaurant chain that includes the ‘Slug and Lettuce’ bars, in December for not taking due care to ensure that its preliminary results announcement of 30 July 2002 was not false or misleading..
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01 February 2004
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Vol 16 No 5 - 01 February 2004
General insurance final Conduct of Business rules issued
Applications to conduct general insurance business from 14 January 2005, whether as an insurer or an intermediary, have been accepted by the FSA since 19 January this year. Sarah Wilson, Director of High Street Firms, advised businesses to..
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01 February 2004
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Vol 16 No 5 - 01 February 2004
Deloitte & Touche Wealth Management Ltd fined £750,000
Deloitte & Touche Wealth Management Ltd (DTWM), the private wealth management company owned by professional services firm Deloitte & Touche, has been fined £3/4 million for failings in its compliance arrangements between 1997 and 2001..
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01 February 2004
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Vol 16 No 5 - 01 February 2004
With-profits fair treatment proposals
As part of its major review of the sector, the FSA issued CP207 “Treating with-profits policyholders fairly” in December. Under the proposals, which the regulator plans to implement on 31 March 2005, firms would be required to publish a..
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01 February 2004
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Vol 16 No 5 - 01 February 2004
Salutary reminders about money laundering - as if any were needed
Decided court cases under the Proceeds of Crime Act 2002
may as yet be thin on the ground but the clutch of Financial Services Authority’s regulatory enforcement actions in the money laundering field is growing. After penalties for anti-money..
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01 February 2004
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Vol 16 No 5 - 01 February 2004
Sandler selling regime research findings
Independent research into use of filter process questions to sell simplified investment products (“the Sandler suite”), published in December, found that in 80% of cases the recommendations were the same as a qualified adviser would have..
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01 February 2004
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Vol 16 No 5 - 01 February 2004
Mortgage endowment complaints failings cost Friends Provident £675,000
An initial FSA supervision visit to Friends Provident in late October 2001 revealed that 12 mortgage endowment complaint files out of a sample of 46 had been handled unsatisfactorily, three had been incorrectly classified and in eight inadequate..
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01 February 2004
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Vol 16 No 5 - 01 February 2004
No insurance for fines, FSA rules
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01 February 2004
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Vol 16 No 5 - 01 February 2004
Abbey National Asset Managers Ltd fined £320,000 for SYSC breaches
Inappropriate systems and controls (Rule 3.2.6 SYSC) between December 2001 and January 2003 and failure to observe Principle 2, that “A firm must conduct its business with due skill, care and diligence” cost Abbey National Asset Managers..
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01 February 2004
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Vol 16 No 5 - 01 February 2004
News
Past performance formats standardised
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01 February 2004
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Vol 16 No 5 - 01 February 2004
The same again and then some
Timon Molloy, Editor
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01 February 2004
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Vol 16 No 5 - 01 February 2004