Guernsey Financial Consultants Limited (2015-03-06)

Summary

This is a public enforcement statement by the Guernsey Financial Services Commission (GFSC) concerning Guernsey Financial Consultants Limited (GFC), an insurance intermediary. On 27 February 2015 the Commission imposed a financial penalty of £42,000 on GFC and issued this public statement after finding that GFC and its directors failed to meet the minimum licensing criteria under the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002.

• Client information: GFC failed to evidence that it obtained sufficient information about clients financial and personal circumstances to assess suitability of recommended products.
• Market research: GFC failed to evidence research of the marketplace before recommending products, concentrating recommendations on a small number of providers.
• Disclosure: GFC could not demonstrate that explanations of products, risks, charges and commissions were consistently and clearly provided to clients.
• Record keeping: GFC did not keep and properly maintain adequate accounting and other business records.
• Policy surrenders: Insufficient information was on file to justify early surrender and replacement of policies.
• Governance: The Board of Directors failed to effectively direct and supervise the business and to implement effective compliance procedures.

Mitigating factors included the directors cooperation with the Commission, an agreed independent third-party review of client files (up to £30,000 of which is deductible from the penalty), an early settlement discount, and GFC's undertaking to voluntarily surrender its licence and arrange transfer of its clients to another licensee. The statement also advises GFC's clients with long-term insurance products to seek independent financial advice before deciding to encash policies early.

Key obligations

• GFC's directors undertook to arrange, in principle, for the transfer of its clients to another licensee following voluntary surrender of its licence
• GFC arranged for an independent third-party review of its client files to be conducted by a suitably qualified person, at its own cost (up to £30,000 deductible from the penalty)
• GFC must pay the £42,000 financial penalty imposed under Section 11D of the Financial Services Commission Law (net of the deductible review cost)

Applies to

insurance intermediaries, insurance managers, authorised insurance representatives