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Revealed: FSA investigations – the tricks, the traps and the tests
Author: Laura Miller
Professional Adviser| 03 Feb 2011 | 08:00
Categories: Regulation
Tags:FSA| FSMA
Financial advisers under FSA investigation are forced to undergo a police-style ‘interrogation’ at Canary Wharf and are threatened with losing their permissions if they refuse to answer all of the regulator’s questions, according to a solicitor close to the process.
Speaking exclusively to Professional Adviser, financial services lawyer Alasdair Sampson said the FSA records the meetings and gives interviewees a legal caution in the same way as police questioning.
But the FSA’s interview rules exceed even those of the police, by threatening to strip advisers of their approved persons permissions if they refuse to answer its questions, no matter how they are phrased, according to Sampson.
He said the regulator rarely makes IFAs aware of their right to cross-examine FSA officers during these “compelled interviews”, and most have no idea just how crucial the meeting is until it is too late.
“Most IFAs come out of this process not knowing that they may have just signed their own professional and commercial death warrant,” he said.
Sampson added that he has seen interview transcripts where it is “clear the IFA was being bullied”.
“None of these guys had lawyers, because they didn’t think they needed one,” he said.
Interviews can last up to seven hours, or extend to a second day. The FSA team, which often includes as many as five officers, comes armed with a prepared script of questions which it asks repeatedly until it gets the answers it wants, said Sampson.
He added: “IFAs have told me they were deeply shocked at being interrogated like this. Some have said they felt very intimidated and that the FSA officers were very hostile to them.”
Sampson said advisers are not told the detailed charges against them but are offered the chance of an “early settlement” with a reduced fine.
Advisers are unaware of the actual charges against them until the FSA issues its investigation report, at which stage “it dawns on the IFA just how crucial the recorded compelled interview actually was”, Sampson claimed.
“The FSA quotes extracts from the interview transcript, but too often these are highly selective and taken out of context, when a wider reading of the passage shows that the IFA may have meant something entirely different.”
Sampson said in one recent case he informed the FSA enforcement team leader that the investigation report was “disingenuous to the point of dishonesty”.
He added that IFAs need to ask themselves: ‘Am I at risk of investigation?’ If they are, how exposed are they and how should they *protect themselves and still be within the rules?
The FSA, in its 129-page Enforcement Information Guide, states: “The FSA’s standard practice is generally to use statutory powers to require the production of documents, the provision of information or the answering of questions in interview. This is for reasons of fairness, transparency and efficiency.
“Under FSMA, we are legally required to follow a prescribed enforcement procedure. In addition, we are required to comply with the Human Rights Act 1998.”
Read more: http://www.ifaonline.co.uk/professio...#ixzz1Ctg5c0ou
Author: Laura Miller
Professional Adviser| 03 Feb 2011 | 08:00
Categories: Regulation
Tags:FSA| FSMA
Financial advisers under FSA investigation are forced to undergo a police-style ‘interrogation’ at Canary Wharf and are threatened with losing their permissions if they refuse to answer all of the regulator’s questions, according to a solicitor close to the process.
Speaking exclusively to Professional Adviser, financial services lawyer Alasdair Sampson said the FSA records the meetings and gives interviewees a legal caution in the same way as police questioning.
But the FSA’s interview rules exceed even those of the police, by threatening to strip advisers of their approved persons permissions if they refuse to answer its questions, no matter how they are phrased, according to Sampson.
He said the regulator rarely makes IFAs aware of their right to cross-examine FSA officers during these “compelled interviews”, and most have no idea just how crucial the meeting is until it is too late.
“Most IFAs come out of this process not knowing that they may have just signed their own professional and commercial death warrant,” he said.
Sampson added that he has seen interview transcripts where it is “clear the IFA was being bullied”.
“None of these guys had lawyers, because they didn’t think they needed one,” he said.
Interviews can last up to seven hours, or extend to a second day. The FSA team, which often includes as many as five officers, comes armed with a prepared script of questions which it asks repeatedly until it gets the answers it wants, said Sampson.
He added: “IFAs have told me they were deeply shocked at being interrogated like this. Some have said they felt very intimidated and that the FSA officers were very hostile to them.”
Sampson said advisers are not told the detailed charges against them but are offered the chance of an “early settlement” with a reduced fine.
Advisers are unaware of the actual charges against them until the FSA issues its investigation report, at which stage “it dawns on the IFA just how crucial the recorded compelled interview actually was”, Sampson claimed.
“The FSA quotes extracts from the interview transcript, but too often these are highly selective and taken out of context, when a wider reading of the passage shows that the IFA may have meant something entirely different.”
Sampson said in one recent case he informed the FSA enforcement team leader that the investigation report was “disingenuous to the point of dishonesty”.
He added that IFAs need to ask themselves: ‘Am I at risk of investigation?’ If they are, how exposed are they and how should they *protect themselves and still be within the rules?
The FSA, in its 129-page Enforcement Information Guide, states: “The FSA’s standard practice is generally to use statutory powers to require the production of documents, the provision of information or the answering of questions in interview. This is for reasons of fairness, transparency and efficiency.
“Under FSMA, we are legally required to follow a prescribed enforcement procedure. In addition, we are required to comply with the Human Rights Act 1998.”
Read more: http://www.ifaonline.co.uk/professio...#ixzz1Ctg5c0ou
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