The firm also failed to make and retain records that demonstrate the suitability of its advice and ensure that its business is conducted in accordance with FSA requirements.
Jonathan Phelan, the FSA’s head of retail enforcement, said: “Communicating with customers in a way that is clear, fair and not misleading is an important part of treating them fairly, particularly in areas such as long-term savings and pensions, where the wrong decisions could lead to hardship in retirement.
“Where we have concerns about the quality of the advice given, we will require firms to undertake reviews of past business, often at considerable cost to them, to identify and remedy any unsuitable advice.”
Between September 2006 and September 2007, the firm issued suitability letters to customers that did not explain why the recommended transaction was suitable and failed to adequately disclose the risks and any disadvantages of recommended transactions. Legacy also failed to make or retain records to demonstrate the suitability of its advice.
In order to address the potential risk of unsuitable recommendations having been made to customers, Legacy has appointed an external compliance consultant to undertake a past business review of a percentage of sales of certain products selected on risk-based criteria, which will identify any unsuitable recommendations, assess any loss to customers, and pay appropriate redress where unsuitable advice has led to loss.
