BBC News
watch One-Minute World News
Last Updated: Monday, 14 January 2008, 13:51 GMT
FSA fines 'high pressure' broker
FSA headquarters
The FSA is reviewing the selling practices of small firms
A firm which used "high pressure sales tactics and misleading information" to sell shares has been fined 250,000 by the City watchdog.

Square Mile Securities was punished by the Financial Services Authority (FSA) after a review of its transactions.

It encouraged customers, including pensioners, to buy shares they did not want or could not afford, the FSA said. Had it not settled the case, Square Mile might have been fined 1.5m. It said it accepted the FSA's findings.

In a statement, the firm sought to reassure the FSA and its customers, "that we are doing everything in our power, under the guidance of the regulatory authorities, to ensure that we achieve a significant improvement in customer service levels".

High pressured sales practices are wholly unacceptable
Margaret Cole, Financial Services Authority

This includes overhauling the company's structure, management, culture and systems, it said.

Square Mile will now write to its customers, telling them about the FSA's findings and giving information on how complaints about the firm can be made.

'Unacceptable' tactics

The FSA reviewed 55 of Square Mile Securities' transactions carried out between March and May 2006.

The watchdog said the review found that advisers "frequently used unacceptable sales tactics".

In addition, the company sometimes failed to get a customer's consent before selling them high risk shares, the FSA said.

"High pressured sales practices are wholly unacceptable," said the FSA's director of enforcement, Margaret Cole.

"Firms that use such sales tactics undermine the regulatory requirement to treat customers fairly. A firm's customers are entitled to rely on it to provide them with advice and information that is clear, accurate and not misleading."

The punishment follows a 49,000 fine for Wills & Co stockbrokers in October last year for not making sure that its customers understood the risks associated with penny shares.

Review

"The FSA will not tolerate any regulated firm coercing customers into buying financial products or services they do not want or can't afford," Ms Cole added.

"We are currently reviewing how stockbroking firms conduct their business and will not hesitate to take action against any that falls short of the standards we expect."

SEE ALSO
Regulator must 'name and shame'
07 Nov 07 |  Business
FSA threatens mortgage brokers
26 Nov 07 |  Business
Broker closed for sub-prime loans
19 Nov 07 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific