Law and Justice concept

FCA bans IFA directors for not being fit and proper

On 12 October 2020, the FCA published two final notices banning two individuals (Peter Howson and John Butterfield) from performing any regulated activity.

Mr Howson and Mr Butterfield were both directors of Vanguard Wealth Management Limited (no connection to the Vanguard group).

Between 2013 and 2104, both were found by the FCA to have submitted false and misleading information about the high net worth status of their customers to a provider of self-invested personal pensions (which the FCA found to be entirely blameless in the episode).

Specifically, Mr Howson was found to have knowingly submitted false information about a total of 33 customers (as well as himself).  In the same period, Mr Butterfield was found to have knowingly submitted false information about 48 customers.

On the (false) basis that the customers were high net worth individuals, a number of investments were made in an unlisted company called Elysian Fuels PLC by the pension funds of those customers.  This generated “substantial” fees and commission for Mr Howson and Mr Butterfield but resulted in a near total loss for the customers.

In banning the pair from performing any regulated activity, the FCA Tribunal considered that Mr Howson and Mr Butterfield lacked fitness and propriety.  Specifically, they lacked the honesty and integrity required by FIT 1.3.1G.

It’s always useful to be aware of FCA decisions on individual fitness and propriety.  When firms provide SM&CR training to staff, cases such as this one can provide valuable real-life examples of the types of behaviour that should be avoided.  Unfortunately, at least from a training point of view, it’s difficult to imagine a more cut and dried case of individuals who are not fit and proper to perform their roles.  To that extent, whilst interesting, there are probably a limited number of lessons that can be learned or applied.