The Financial Conduct Authority (FCA) has recently imposed significant restrictions on a wealth management firm based in Preston. These measures come after the regulator raised serious concerns about the firm’s practices.
London Stone Securities Limited now finds itself unable to carry out regulated activities without specific permission from the FCA. This includes a ban on charging further fees to existing clients or taking on new clients.
FCA’s Concerns and Actions
The Financial Conduct Authority (FCA) has placed restrictions on a Preston-based wealth management firm due to significant concerns. These measures mean the firm, London Stone Securities Limited, cannot perform regulated activity, charge further fees to existing clients, or take on new clients without permission.
Additionally, the firm is required to withdraw all financial promotions and maintain its assets within the business. This decision follows serious concerns that the firm was not delivering good client outcomes. Specifically, the FCA noted that the firm was charging excessive fees without justification and affecting low-value investment portfolios.
High Fees and Poor Communication
The FCA highlighted that excessive fees were a major issue. The fees charged did not appear to benefit the firm’s clients or provide fair value. Furthermore, the charges were not always communicated to or agreed upon with all clients in advance.
This lack of transparency raised concerns about the firm’s service terms. The risk was further heightened as some clients had vulnerabilities, making them more susceptible to poor service.
Misleading Financial Promotions
The FCA’s investigation found that London Stone Securities issued financial promotions that did not comply with FCA rules. These promotions appeared to target potential clients who were elderly, disabled, and vulnerable.
This discovery added to the FCA’s list of concerns. The inconsistencies in the firm’s information, compared to what was provided during the sector-wide wealth management data survey, also raised alarms.
Inconsistencies in Client Charges
During the FCA’s sector-wide wealth management data survey, London Stone Securities indicated that the highest charge applied to any individual client was five per cent of their portfolio value.
However, the FCA found instances where fees exceeded this amount significantly. For example, some clients paid fees exceeding 65% of their portfolio value, significantly reducing their investment’s worth.
Such drastic discrepancies indicated inconsistencies in the firm’s communication with its clients and the FCA.
Financial Movements under Scrutiny
The FCA noted that during its ongoing enquiries, London Stone Securities transferred £1.3 million from its bank account. This move came under scrutiny as the FCA believed the firm might not have communicated openly or honestly with its regulator.
This financial activity raised further questions about the firm’s internal processes and transparency. The FCA decided to maintain the restrictions initially imposed in April to safeguard consumer interests.
Firm’s Response and Rights
London Stone Securities has the right to challenge the FCA’s decision and refer the matter to a tribunal. However, the firm remains under the imposed restrictions due to the seriousness of the potential harm caused to consumers.
The FCA’s statement underscored the importance of protecting consumers and maintaining trust in the financial sector. The ongoing situation reflects the FCA’s commitment to ensuring firms adhere to regulatory standards.
The actions taken by the FCA highlight its commitment to protecting consumers from questionable practices. London Stone Securities faces serious challenges ahead in addressing these allegations and restoring trust.
This case serves as a reminder of the importance of regulatory oversight. It underscores the need for transparency and ethical conduct in the financial sector.