Financial Regulator sanctions a multi-agency intermediary

Brendan Burgess

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Press release issued this morning:

Settlement Agreement between the Financial Regulator and M.I.S Financial Services Limited and Mr Stephen Donnelly
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The Financial Regulator has entered into a Settlement Agreement with effect from 14 December 2006 with M.I.S. Financial Services Limited and Mr Stephen Donnelly, Director in relation to breaches of regulatory requirements.

The Financial Regulator has reasonable cause to suspect that breaches of regulatory requirements occurred in relation to M.I.S. Financial Services Limited while Mr Stephen Donnelly was a director.

These suspected breaches relate to a failure to act honestly and fairly in conducting business activities in the best interests of clients and the integrity of the market and a failure to take all reasonable steps to ensure that actions in the best advantage of the client were taken.
From 1 August 2004 to February 2005, M.I.S. Financial Services Limited and Mr Donnelly did not properly inform the four affected clients about the actual terms of the investment policies which they had taken out. The affected clients were led to believe that the terms of the investment policies which they had taken out were more favourable than was in fact the case.

The Financial Regulator confirms that neither of the breaches gave rise to a concern in relation to the integrity of M.I.S. Financial Services Limited client money.

M.I.S. Financial Services Limited voluntarily agreed to relinquish its authorisation as a multi-agency investment intermediary and decided not to apply for renewal of its mortgage intermediary licence.
Additionally, all M.I.S. Financial Services Limited clients have been transferred to another regulated financial service provider.
Mr Stephen Donnelly, Director agreed to a disqualification from being a person concerned in the management of a regulated financial service provider for a period of 5 years commencing from the date of the agreement.

Additionally, Mr Stephen Donnelly agreed to pay a sum equal to the commission earned after 1 August 2004, in respect of the relevant investment policies to affected clients.

The Financial Regulator confirms that all parties co-operated with the examination and the matter is now closed.​
 
Brendan said:
Additionally, Mr Stephen Donnelly agreed to pay a sum equal to the commission earned after 1 August 2004, in respect of the relevant investment policies to affected clients.
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Doesn't this mean that the affected clients are at a loss in real terms?

Also - is this a first?
 
That is interesting. Does it mean that we can expect the operating licence of AIB, NIB and ACC banks to be handed in next for similar type behaviour?

Irish banks collectively were forced to return over €100 million to cutomers so guilt is similarly admitted. Certain that there is no double standard I won't be able to eat or sleep anticipating the Press Releases. Any day now.
 
Unfortunately this press release can't be taken at face value because IFSRA have devalued their reputation by releasing misleading Press releases and reports in the past.

I'd like to know more about the specifics of the case. The punishment seems extraordinarily harsh, and if applied equally to all intermediaries who did the same thing (whatever that is) I wonder how many would be left.

The release is vague as to how the clients were mislead. Were they lied to, or was information witheld? Not that either is acceptable, but the first is more serious than the second.

Is this a show case? An example being made of someone? Or will it be backed up with more similar cases.

Based on how little we know, and how little I'd trust an IFSRA statement, I'm not even sure anyone is even in a position to judge whether this company/individual deserved the punishment they received.

Is there any opportunity for the public to get the full details of the offence?

-Rd
 
daltonr said:
Unfortunately this press release can't be taken at face value because IFSRA have devalued their reputation by releasing misleading Press releases and reports in the past.
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Can anybody cite examples of such allegedly misleading press releases and reports?
 
How would contributors compare the above case with the one today where an accountant has been diqualified from holding a directorship, by the high court, for a period of three years as a result of his involvement in the Ansbacher tax-evasion scheme.?
 
On the face of it, a forced withdrawal from the business on the basis of four cases of apparent misleading sales looks very heavy handed hence my earlier quip but I'd guess that there is a lot more than this published info at least I'd hope so. IFSRA needs to use its sanction powers proportionately and evenly if its to maintain integrity and faith in its operations. Frankly I'd have my doubts it is capable of differentiating.

Its a fact that certain Credit Unions are trading in breach of compliance and exposing their savers to high risk. Questions arise about the scale of bad debt, high risk lending including to big projects and financial accounting. IFSRA however adopts a light hand approach whenever the stability of a deposit taker could be tarnished it seems.

Freddy - here's the question; if the intermediary caught in mis-selling four cases was a subsidiary or division of a bank, would IFSRA use the csame sanction??
 
RTE's Prime Time investigation on auctioneers and mortgage brokers highlighted that one large Mortgage Intermediary firm was illegally passing financial information about customers to the auctioneering firm from whom the customers had been referred. This of course would have serious financial consequences for the consumers concerned as the auctioneer would then know their price range and would doctor the bidding process accordingly.

My personal experience is that this was not a unique occurrence.

The mortgage intermediary firm is certainly still trading as I hear radio adverts for them regularly. And to be fair, if we are to believe that the practices mentioned above were limited to one employee, it would be unfair to close the entire company for the wrong-doing of one employee. Although I in my opinion management of any firm are responsible for the actions of their employees and should have control systems in place and that's why they get paid the big salaries, so I feel a sanction or fine would have been appropriate.

But unless I missed it, I haven't heard of the Financial regulator take the same actions as this thread is discussing, against either the firm or it's employee. Has he been banned for five years? Has he or the firm been paying compensation to house-buyers who paid over the odds for a house because he had told the auctioneer how high to push the bidding?
 
Wilkes said:
Freddy - here's the question; if the intermediary caught in mis-selling four cases was a subsidiary or division of a bank, would IFSRA use the csame sanction??
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Based on what I have seen to date the answer would be 'no'. However, you must take into account that I would be slightly biased.
 
You probably should be aware also that all those historic overchargers and non resident deposit takers are probably upstanding QFAs now on the basis of their experience.
 
This is back in the news today, covered on the Pat Kenny show. To do with his still being a Director of a company associated with Friends First and a client who claims to be out of pocket on an investment
 
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