• FSA Library
  • Communication documents
    • Press releases
      • 2007

FSA/PN/061/2007
15 May 2007

The Financial Services Authority has fined Charterhouse Consulting Wealth Management Limited ("Charterhouse") £122,500 for carrying out discretionary portfolio management without permission and for various conduct of business failings.

Charterhouse regularly switched a number of clients between funds although the firm did not have permission to operate in this way. The FSA’s investigation found that Charterhouse would often send clients an email before 6.30am in the morning proposing the switching of funds and requiring a response by 8.00 am. Switches would then take place without any further instruction from the client.

Charterhouse also failed to record sufficient client information to demonstrate the suitability of its advice; failed to ensure transactions were appropriate for its customers' attitude to risk and failed to communicate with its clients in a clear, fair and not misleading manner.

Jonathan Phelan, FSA Head of Retail Enforcement, said:

“It is unacceptable for a firm to operate in effect as a Discretionary Portfolio Manager without appropriate FSA authorisation. The switching of clients between funds in a way that was outside of their declared attitude to risk could have resulted in them suffering large and unexpected financial losses. The disciplinary action we have taken sends out the clear message that firms wishing to offer wealth management services must ensure they operate in a compliant way, which includes ensuring they have the appropriate regulatory permissions for their business activities.”

The FSA has taken into account the mitigating steps taken by Charterhouse to regularise its business activities which included the cessation of business activities falling outside its permitted activities. As a result of agreeing to settle at the earliest opportunity Charterhouse has received the maximum 30%, discount afforded under the FSA's Discount Scheme. The fine would otherwise have been £175,000.

Notes for editors

1. The full text of the Final Notice issued by the FSA, includes the background to the case, the relevant statutory provisions, regulatory requirements contravened, and the factors taken into account when setting the level of the fine.
2. 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.
3. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.