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FSA/PN/031/2008
2 April 2008 

The Financial Services Authority (FSA) has fined Mansion House Securities Limited (Mansion House) £122,500 for giving customers unsuitable and inaccurate advice when selling higher risk shares.

The FSA reviewed 30 recommendations relating to higher risk shares, made by Mansion House between May 2006 and January 2007.

The FSA found that Mansion House's advisers had given customers inaccurate information and failed to highlight the risks associated with the recommended shares. Its advisers also used inappropriate sales practices to pressure customers into buying shares.

The review also showed that Mansion House had not set up adequate compliance procedures or ensured that its staff were properly trained. Furthermore, Mansion House had not disclosed the commission and charges it received in relation to the shares.

Margaret Cole, FSA Director of Enforcement, said:

"Customers expect their stockbrokers to give them clear information, make suitable recommendations and not use unacceptable sales practices. In failing to do this, Mansion House treated its customers unfairly.

"This is our third recent fine against a stockbroker for treating customers unfairly and should be a warning to others that we will not hesitate to take action where it is necessary to protect consumers."

Mansion House's failings came to light as a result of ongoing visits by the FSA to assess the practices of small firms when selling higher risk shares.

Mansion House is appointing a skilled person to assess its systems and sales practices, and to determine any appropriate compensation for customers. Mansion House also agreed to settle at an early stage of the investigation, otherwise the fine would have been £175,000.

Notes for editors

1. Mansion House Securities Limited is a stockbroking firm based in London and has customers around the UK. It has undertaken transactions with clients since May 2006. The firm specialises in advising and dealing in shares that have not yet been admitted to trading on any market.
2. Mansion House's customers can contact the firm if they have any concerns about any advice the firm has given them.
3. This is the third fine from an ongoing FSA thematic project looking at the selling practices used by small firms when recommending higher risk shares. In October 2007, the FSA fined Wills and Co Stockbrokers £49,000 for not ensuring its customers understood the risks associated with penny shares and in January 2008 the FSA fined Square Mile Securities Limited £250,000 for using high pressure sales tactics. The work started in June 2006 and is being carried out to ensure that small firms are treating their customers fairly.
4. 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.
5. Consumers can find helpful tips and guidance, on the type of information to expect from firms when buying investments, on the FSA's Moneymadeclear website.
6. 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.
7. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.