The Financial Conduct Authority (FCA) has banned the husband and wife founding partners of Lanarkshire-based Westwood Independent Financial Planners from working in financial services due to “integrity failings”.
The latest move against Mrs Colette Chiesa and Mr John Chiesa by the FCA comes six years after action taken by the City watchdog’s predecessor, the Financial Conduct Authority, against their business in May 2011 over the mis-selling of geared traded endowment policies (GTEP products) after which the firm became insolvent and went into sequestration, the term used in Scotland to describe bankruptcy.
As well as her ban, Mrs Chiesa has also been fined £50,000 for attempting to mislead the FCA during an FCA interview.
Mr and Mrs Chiesa were founding partners of Westwood Independent Financial Planners (Westwood), a firm authorised by the FCA to provide personal investment advice.
Westwood, and therefore Mr and Mrs Chiesa as partners with unlimited liability in the company, had significant liabilities arising from numerous valid claims filed with the Financial Ombudsman Service relating to the advice offered on GTEP sales.
The FSA said Westwood had invested 10 clients, including a retired 73-year-old widow in financial difficulties, to re-mortgage their homes in order to invest in Gteps which promised returns of 10 per cent per annum.
The regulator said it had found ‘very serious’ failings in the suitability of advice given by Westwood to its clients adding that the firm had not communicated its advice in way that was fair, clear and not misleading.
In late 2011, a Trustee was appointed to establish the value of the Chiesas’ assets and liabilities, so an assessment could be made which would allow them to pay creditors.
The FCA has now found that Mr and Mrs Chiesa made inadequate, incomplete and misleading disclosures to their Trustee about their financial situation during their sequestration, in order to avoid the Trustee inquiring into, and potentially recovering, assets for the benefit of their creditors.
The watchdog said Mr and Mrs Chiesa failed to disclose their continued beneficial interest in an unregulated company that was capable of paying over £1 million per year into an off-shore remuneration trust for their benefit.
This trust paid to Mr and Mrs Chiesa a total of approximately £2.6 million between April 2012 and December 2014, at an average of over £84,000 per month. The payments were in the form of loans which, in the FCA’s view, were never intended to be repaid.
Mr and Mrs Chiesa also failed to disclose that the unregulated company regularly paid significant personal and living expenses on their behalf, including rent on a London address of around £5,000 per month.
Between October 2011 and July 2013 Mrs Chiesa spent on average £6,000 per month on clothing, jewellery, interior design, cosmetic dental treatment, travel and her Porsche car. Between August 2011 and December 2014 Mr Chiesa spent on average £12,000 per month on flying lessons, tennis tickets, football tickets and club membership.
During the sequestration process Mr and Mrs Chiesa each paid only £200 per month towards their creditors.
Customers who lost significant sums due to Westwood’s mis-selling received compensation from the Financial Services Compensation Scheme (FSCS). By late 2016 the FSCS had paid out over £3.8 million. Westwood’s liabilities to these customers were therefore borne by the financial services industry.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “The Chiesas misled their creditors, especially the FSCS, in a calculated way. Their misconduct demonstrates a serious lack of integrity.”