The Financial Conduct Authority (FCA) has fined Porta Verde Financial Services Limited (Porta Verde) £25,000 for the serious mis-selling of insurance products by two of its appointed representatives (ARs).
ARs are agents of a regulated firm (the principal) who, by virtue of, and within the scope of, their appointment may carry out regulated activities for which the principal is authorised, provided that the principal remains ultimately accountable for its ARs’ actions.
According to the FCA’s final notice, two of Porta Verde’s ARs had, during the course of their performance of regulated activities on behalf of Porta Verde, used unacceptable sales practices to sell home emergency plumbing and drainage insurance, and insurance for satellite television equipment, including pressure selling and giving misleading and inaccurate information.
The FCA found that, by failing to prevent these practices, Porta Verde had breached several of the FCA’s principles of business including Principle 6, which requires that a firm pays due regard to the interests of its customers and treats them fairly, and Principle 7, which requires that a firm communicates with its clients in a way which is clear, fair and not misleading.
The FCA also found serious fault in Porta Verde’s supervision of the ARs. According to the final notice, it had failed to carry out sufficient due diligence assessments on their recruitment, to monitor their performance, and to take appropriate remedial action in response to the FCA raising its concerns in September 2011. The FCA found that, as a result, Porta Verde had breached Principle 3, which requires that a firm takes reasonable care to organise and control its affairs responsible and effectively, with adequate risk management systems.
The FCA had set the level of the fine at £247,715 after applying a 30% discount for early settlement. However, the FCA further reduced the fine to £25,000 due to Porta Verde’s “serious financial hardship”.