The UK's Financial Services Authority has fined DBS Financial
Management PLC, the support network for Independent Financial
Advisers (IFAs), after one of its members, EnsureDirect.com, issued
misleading adverts.
DBS Financial Management Plc incurred the fine because it approved the misleading advert for 'Protected ISAs' and failed to improve its advertising approval procedures between 2000 and 2001.
Carol Sergeant, FSA Managing Director said:
"This is the FSA's first fine for misleading advertising. We require financial advertisements to be 'clear, fair and not misleading.' The direct offer advertisement for 'Protected ISAs' that was approved by DBS did not come close to meeting this standard.
"The fine would have been much higher if DBS had not fully co-operated with us by overhauling its advertising approval procedures and offering the 455 investors who responded to the advertisement their money back."
In June 2001 DBS approved 'Protected ISAs', a 24-page colour brochure distributed as a supplement with four and a half million copies of national newspapers. This complicated product had many unusual features that would have been unfamiliar to readers of those newspapers. The FSA said that DBS should have ensured that the advertisement would be understood by its likely audience and also that it presented a balanced picture of the investment and the risks involved.
Since the breach occurred, EnsureDirect.com Ltd. appears to have ceased trading and DBS has been acquired by Misys Life and Pensions (a subsidiary of Misys PLC), the controller of five IFA Networks. The FSA observed that "extensive action has been taken to ensure that the appropriate systems and controls are now in place for approving advertisements."
The penalty was imposed under the Financial Services and Markets Act 2000 in respect of breaches by DBS of the Rules of the Personal Investment Authority (PIA), of which DBS was a member, and the FIMBRA Rules.
