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The Financial Services Authority (FSA) has censured Falcon Securities (UK) Limited (Falcon), a London-based stock broking firm, for numerous failures by its appointed representative, Montague Pitman Securities Limited (MPS), in the way it treated its customers.
MPS failed to obtain sufficient information about its clients’ personal and financial circumstances to assess whether its advice was suitable before recommending shares. The firm also failed to disclose the inducements it received for selling the shares and used inappropriate sales tactics to pressurise its clients into agreeing to purchase shares.
The FSA would have fined Falcon £240,000 but for the fact that they are seeking to go into administration. Falcon has also varied its regulatory permissions so that it can no longer provide advice to clients or sell them shares.
Margaret Cole, FSA director of enforcement, said:
“This action is one of a series the FSA has taken to raise the standards of customer treatment in the small cap stock broking sector.
“As MPS’ principal, Falcon had an important role to play in protecting consumers. By allowing its appointed representative to treat its clients badly, Falcon allowed UK consumers to be put at significant risk of investing in unsuitable shares.”
Falcon has agreed to send Montague Pitman’s clients a letter advising them of the FSA’s findings which will include information on how they can make a complaint.
