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FSA/PN/093/2006
21 September 2006

The Financial Services Authority has today fined Langtons (IFA) Limited £63,000 for failing to properly apportion roles and responsibilities to its senior management and for not having systems in place to ensure that its advisers were trained and competent. As a result of these failings, customers were potentially put at risk.

Between January 2003 and November 2005, Langtons failed to allocate responsibilities among its senior management effectively. The resulting confusion over senior management roles meant that its systems and controls were inadequate and its business was not compliant. Consequently, Langtons did not have in place key safeguards to ensure its customers were protected.

Langtons failed to determine the training needs of its investment advisers. Furthermore when training was undertaken it was not properly evaluated or recorded. Langtons did not assess the continuing competence of its advisers or ensure that those under supervision were being adequately monitored.

Margaret Cole, FSA director of Enforcement, said:

"Langtons' senior management could not show that they understood or even knew their responsibilities as a regulated business and thereby the firm unnecessarily exposed its consumers to potential risk.

"Responsibility for proper systems and controls and for compliance with rules designed to protect consumers ultimately lies with a firm's senior management, and we expect them to take these responsibilities seriously."

The failings also meant that Langtons' complaints handling procedures were inadequate and it failed to ensure complaints were dealt with independently. Additionally, the approval of its financial promotions was not carried out by a person with appropriate expertise to ensure that they were clear, fair and not misleading.

Langtons' failings were discovered during an FSA visit to the firm rather than through its own systems and controls.

In determining the level of the financial penalty, the FSA took into account that Langtons has engaged an independent consultant to review its compliance arrangements and its financial promotions procedures. By agreeing to settle at an early stage of the investigation Langtons also qualified for a 30% discount, without which the fine would have been £90,000.

Notes for editors

1. The full text of the Final Notice includes the background to the case, the relevant statutory provisions, and the regulatory requirements contravened.

2. Financial penalties are not treated as income by the FSA. They are applied for the benefit of authorised persons (or the issuers of securities admitted to the official list) as appropriate, and so given back to the industry in subsequent years.

3. The FSA operates a discount scheme for financial penalties imposed during the settlement process. The discount is dependant on the timing of any settlement reached as follows:

   1. Stage one (early settlement stage): 30%

   2. Stage two (up to the expiry period for making written representations to the Regulatory Decisions Committee): 20%

   3. Stage three (up to the issue of the Decision Notice): 10%.
      
      Further information on the FSA's settlement process can be found in the Enforcement information guide.

4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.

5. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.