FSA fines firm and its director/compliance officer over risk management failings – The FSA has fined Accendo Markets Ltd (Accendo) £56,000 (including a 20 per cent discount) for failing to have adequate risk management systems in place when providing advice to customers on contracts for difference (CFDs) contrary to Principles 3 and 9 of the FSA’s Principles for Businesses.
Accendo advised customers and arranged their transactions in CFDs with other FSA authorised firms who dealt with the customers as principal. During the period between 7 January 2008 and 1 October 2010, 98 per cent of Accendo’s business involved the sale of CFDs. The FSA found that the firm failed to gather adequate client information before providing advice and failed to keep records of customers’ trading strategies.
Additionally the firm did not have a robust compliance monitoring programme in place and Accendo appointed brokers who did not hold the necessary qualifications required by the FSA. Furthermore, Accendo failed to take reasonable steps to ensure that its brokers always distinguished between trades that were execution-only and those that were advisory transactions, creating the risks of customers entering into transactions that were unsuitable for them and of being exposed to too high a risk.
The FSA has also fined Accendo’s director and compliance officer, Gregory Paul White £10,000 (including a 20 per cent discount) for breaching Principles 6 and 7 of the FSA’s Statement of Principle and Code of Practice for Approved Persons. Mr White received the penalty for failing to meet FSA compliance requirements and for not exercising due skill, care and diligence in his capacity as director and compliance officer.
Copies of the final notices for Accendo and Mr White are available.
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