The Financial Services Authority (FSA) has fined Rockingham Independent £35,000 and imposed partial bans on two directors and an adviser for failing to provide suitable advice to retirement age customers.

The FSA found a number of failures at the Peterborough-based company that resulted in 426 customers potentially exposed to the risk of receiving unsuitable investment advice.

Company directors Stephen Hunt and Jonathan Edwards and adviser Gary Forster have all received partial bans from the FSA.

An investigation into operations at the retirement income broker revealed that 39 investors were advised to put their money into Unregulated Collective Investment Schemes (UCIS), despite the regulatory restriction on promotion of these investments.

The FSA said that UCIS should only be promoted to sophisticated investors and high net worth individuals, and not the general public in the UK.

The regulatory body also reported that investors at Rockingham gave ‘misleading descriptions’ of its pension draw down scheme, the Retirement Income Tri-Investment Account (RITA), ‘describing it as low risk’.

Customers were offered to invest in the ARM Bond, a senior life settlement policy that did not provide a capital guarantee.

Rockingham recommended the bond to cautious to moderately cautious investors and did not put restrictions on the amount placed on each of the underlying investments, the FSA said.

The company made 426 advised sales in total during the relevant period, including 39 UCIS sales and over 200 ARM sales.

The FSA confirmed, ‘Hunt and Forster have been banned from holding the significant influence functions (SIF) and the controlled customer function (CF30) relating to any regulated activity promoting or recommending UCIS.’

Edwards received a similar ban preventing him from promoting UCIS and has also been stopped from performing compliance oversight at any firm.

The FSA stated that he would have received a £20,000 fine ‘but for evidence that this would cause serious financial hardship’.

Tracey McDermott, acting director of enforcement and financial crime, said, ‘Rockingham and its advisers made the mistake of selling products that they did not fully understand.

‘We have previously warned about the particular risks of UCIS and life settlement products which are likely to be unsuitable for the vast majority of investors. The industry must heed these warnings,’ she added.

Rockingham has agreed to conduct a past business review. Customers can contact Rockingham’s helpline on 01832 770460.