The Financial Conduct Authority (FCA) announced today (Wednesday) that it has imposed strict restrictions on wealth management firm London Stone Securities Limited. The company can no longer undertake any
regulated activities, charge additional fees to current clients, or accept new
clients without FCA approval.
Excessive Fees and Lack of Transparency
The FCA imposed the restrictions after discovering that
London Stone Securities charged clients excessive fees that lacked
justification. These charges reportedly did not appear to benefit clients or
offer fair value, particularly impacting low-value investment portfolios.
The watchdog has also faulted the company for allegedly
failing to communicate or agree on these fees with all clients beforehand,
raising transparency issues. The situation was especially concerning given that
many of the firm’s clients were elderly, disabled, or otherwise vulnerable.
FCA found that London Stone Securities issued financial
promotions that did not comply with FCA rules. These promotions seemed to
specifically target potential clients who were elderly, disabled, or
vulnerable, compounding the firm’s misconduct. Furthermore, the firm provided
inconsistent information to the FCA.
While it reported a maximum fee of 5% of portfolio value,
some clients paid fees exceeding 65%, drastically diminishing their investment
values. The firm also raised the alarm by transferring £1.3 million from its
bank account during the FCA’s ongoing inquiries.
Protecting Consumers
In April, the FCA imposed initial restrictions to protect
consumers. After reviewing the firm’s representations, the FCA decided
that these restrictions should remain due to the potential consumer harm
involved. London Stone Securities has the right to challenge this decision and
refer the matter to the tribunal.
The FCA’s stringent actions reflect the seriousness of the
firm’s violations and its commitment to safeguarding consumer interests. By
maintaining these restrictions, the FCA aims to prevent further harm and ensure
that all financial services firms operate with integrity and transparency.
The Financial Conduct Authority (FCA) announced today (Wednesday) that it has imposed strict restrictions on wealth management firm London Stone Securities Limited. The company can no longer undertake any
regulated activities, charge additional fees to current clients, or accept new
clients without FCA approval.
Excessive Fees and Lack of Transparency
The FCA imposed the restrictions after discovering that
London Stone Securities charged clients excessive fees that lacked
justification. These charges reportedly did not appear to benefit clients or
offer fair value, particularly impacting low-value investment portfolios.
The watchdog has also faulted the company for allegedly
failing to communicate or agree on these fees with all clients beforehand,
raising transparency issues. The situation was especially concerning given that
many of the firm’s clients were elderly, disabled, or otherwise vulnerable.
FCA found that London Stone Securities issued financial
promotions that did not comply with FCA rules. These promotions seemed to
specifically target potential clients who were elderly, disabled, or
vulnerable, compounding the firm’s misconduct. Furthermore, the firm provided
inconsistent information to the FCA.
While it reported a maximum fee of 5% of portfolio value,
some clients paid fees exceeding 65%, drastically diminishing their investment
values. The firm also raised the alarm by transferring £1.3 million from its
bank account during the FCA’s ongoing inquiries.
Protecting Consumers
In April, the FCA imposed initial restrictions to protect
consumers. After reviewing the firm’s representations, the FCA decided
that these restrictions should remain due to the potential consumer harm
involved. London Stone Securities has the right to challenge this decision and
refer the matter to the tribunal.
The FCA’s stringent actions reflect the seriousness of the
firm’s violations and its commitment to safeguarding consumer interests. By
maintaining these restrictions, the FCA aims to prevent further harm and ensure
that all financial services firms operate with integrity and transparency.
This post is originally published on FINANCEMAGNATES.
