THE Financial Services Authority (FSA) has banned a former director of collapsed Glasgow independent adviser City Gate Money Managers from acting in a regulated role.
The watchdog revealed yesterday that it had imposed financial penalties of £180,000 on City Gate and £70,000 on its former compliance officer Stewart Domke over allegations that they “failed to have adequate systems and controls in place to monitor and oversee its advisers”.
City Gate said it was unable to pay because it is in liquidation. Domke also gave evidence to show that a fine would cause him “serious financial hardship”, the regulator added.
It is thought Domke is the first to be censured following the failure of sister firm Dunedin Independent. Both were owned by Swiss firm Helvetia Wealth.
The two Scottish businesses were put into liquidation in February following 60 complaints from clients who suffered losses of around £6m on failed property investments.
Domke is currently working as a consultant to a Glasgow IFA, Beatha Wealth Management, led by Didier Slama.
He is also a former adviser to City Gate, which acquired some of the assets of Dunedin from the liquidator.
The FSA did not censure Domke in relation to the alleged misselling at Dunedin. Instead, it said that he “had the opportunity to improve compliance at City Gate but failed to do so”.
The latest fine was the second time City Gate had been slapped by the FSA after it was charged £42,000 in 2009 for similar failings.
Bill Sillett, head of retail enforcement at the FSA, said: “City Gate is a repeat offender. It is rare that the FSA has to take action against a firm more than once, but City Gate’s systems and controls remained poor despite our first enforcement action. City Gate failed to take adequate steps to address the failings we identified.
“The fact that City Gate provided advice it did not have permission to give is inexcusable. It seriously aggravated the case against the firm.
“As a director and compliance officer, Domke had the opportunity to improve compliance at City Gate but failed to do so, leaving in place inadequate systems and controls and failing to monitor or check City Gate’s appointed representatives.”
It is understood Domke will remain in his role at Beatha despite being banned from holding what the watchdog refers to as “significant influence functions.”
Last night, a spokesman for Beatha said: “Mr Domke is currently acting in an advisory role as a consultant for misselling specialists Beatha Corporate Claims. He does not and will not have any significant influence functions over any regulated business.”
Despite its woes in Scotland, Helvetia claims that its total assets under management currently exceed $39 trillion, which it expects to increase to $48.5 trillion by 2013.
A representative from Helvetia was unavailable for comment.
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