FSA fines kilminster financial management

LONDON – In mid-June, the UK Financial Services Authority (FSA) fined Kilminster Financial Management, a network of independent financial advisers, £42,000 for management and complaint-handling failings that occurred from January 2004 to August 2006.

Kilminster, based in Bristol, failed to treat its customers fairly because it was not handling complaints in good time. In addition, it did not monitor its staff sufficiently or keep appropriate training and competence records.

Kilminster also failed to implement appropriate procedures to co-operate with the Financial Ombudsman Service, the UK body that represents consumers. The ombudsman referred Kilminster to the FSA twice for failures to pay awards promptly, and the FSA had to write to Kilminster about complying with two further ombudsman awards that Kilminster had failed to pay promptly. Kilminster has now complied with both awards and paid both complainants.

The FSA viewed the failings as particularly serious due to Kilminster's "poor regulatory history". In April 2000, the Personal Investment Authority – a predecessor organisation to the FSA – issued a formal warning to Kilminster about its selling practices, training and competence arrangements, compliance procedures and recruitment practices, which resulted in remedial action. The PIA also raised further concerns about record-keeping, training and competence arrangements and compliance procedures in May 2001, which led to additional remedial action.

To rectify things, Kilminster has upgraded its compliance functions by employing more compliance staff, and has increased its management oversight of compliance. It has also engaged independent consultants to review its complaint-handling records and procedures, and its training and competence arrangements. Kilminster agreed to settle at an early stage of the FSA's investigation, and therefore qualified for a 30% discount under the executive settlement procedures.