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UK’s FCA penalizes Sesame over investment advising, systems and controls failings

The UK’s Financial Conduct Authority (FCA) has fined £6,031,200 against investment company Sesame for providing unsubstantial investment advices to clients and poor management of systems and controls to check its appointed representatives (ARs).

An amount of £245,000 has been levied for its unrealistic advices offered pertaining to Keydata life settlement products, while £5,786,200 fine was imposed for systems and controls errors across its investment advice business.

The UK market watchdog accused the company for failing to take reasonable care of its clients, when it advised 426 customers to invest a total of over £6.1m in Keydata life settlement products, during July 2005 and June 2009.

The probe found that the investment advice was given without considering the customers’ stated investment objectives, attitude to risk and the product sold.

The suitability letters provided to customers stated incorrectly that income or capital growth was guaranteed.

Further, the regulators found that the company did not give proper attention to systems and controls to organize and control its affairs responsibly and effectively, and had failed to improve its oversight of the ARs.

The FCA supervisory work between July 2010 and September 2012 claimed that the firm failed to identify and monitor marketing of those products and funds not suitable for most customers and the record-keeping for ARs were remained to be flawed.

Sesame availed a 30% discount on the fine due to early agreeing to settle the charges at an early stage of the investigation, otherwise the penalty would have touched £8,616,000.