The Financial Conduct Authority (FCA) has imposed a number of regulatory restrictions on Romsey-based Campbell & Associates Independent Financial Advice Ltd due to concerns about the potential misappropriation of client funds.
Following an FCA first supervisory notice on 9 February 2023, the firm has been stopped from carrying out any regulated activity and prevented from reducing the value of the assets it holds without the regulator’s consent.
According to the notice, the FCA has “very serious concerns about the conduct of the firm”, as it believes the sole director may have “misappropriated £1.5m ($1.81m, €1.7m) of a client’s funds, including handling client funds without the required Part 4A permission; and failed to repay the client’s funds as promised”.
The firm had permissions to provide advice and arrange deals in investments and pensions. The FCA said the firm had no permissions to hold client money.
Lisa Maureen Campbell is listed as the sole active director of the firm and is the holder of senior management functions, according to Companies House.
Incorporated and authorised as Campbell & Raffle Independent Financial Advice Ltd in 2013, the firm changed its name to Campbell & Associates Independent Financial Advice Ltd in November 2020.
The FCA said, in July 2022, a client transferred a total of £1.5m to the firm’s bank account having accepted the company’s advice to invest in bonds due to mature in January 2023.
The regulator said that the client “was told that the funds were to be invested in bonds issued by a bank” and the firm “provided the consumer with a number of documents seeking to prove that the investment had been made via the bank”.
But, the unnamed bank confirmed to the FCA that it “does not offer such bonds and has no record of any investment relating to this consumer having been made”.
The FCA obtained the firm’s bank statements, and an analysis shows that, contrary to what the consumer had been told, the funds “were not invested in any kind of investment”.
The statements appear to show that, between July 2022 and January 2023, the funds were “transferred to the personal accounts of the firm’s director or otherwise used to purchase a property for the firm’s director to live in”.
The FCA added that the client “repeatedly contacted the firm to arrange for their investment to be repaid as planned”.
In response, the firm’s director reportedly told the client to “roll-over” the investment, claimed that the “repayments had been made” and funds were “being erroneously held up” by the bank, and claimed that the investment “had been accidentally rolled over and could not be repaid”.
The regulator said: “In fact, an analysis of the firm’s bank accounts shows that the firm’s director had misappropriated the great majority of the funds and there were insufficient funds in the firm’s bank account to make the repayment. The firm has since repaid a proportion of the funds, however £1.15m remains unpaid, along with any accrued interest.
“Further, once the consumer had expressed their concerns to the firm’s director about their failure to repay the funds owed, the firm’s director appears to have falsely claimed, on 26 January 2023, that their plan of action to remedy the issue included a meeting that they had scheduled with the authority, during which they would fully disclose the details of the incident and set out their plans to put things right.
“The firm’s director has not made contact with the authority in connection with this matter and no such meeting was ever scheduled.”
Having received the restriction notice from the FCA, the firm was given 72 hours to write to all of its customers and all its platform providers to inform them of the restrictions and their effects.
Campbell & Associates has the right to make written or oral representations to the FCA on the first supervisory notice. It also has the right to make a reference to the Upper Tribunal.
This comes two weeks after the FCA placed a number of restrictions on Fareham-based advice business Nexus Independent Financial Advisers and its DFM arm, Nexus Investment Managers, to prevent them from carrying out any regulated activities and limiting access to their assets.
The FCA said this was “due to concerns about use of certain funds that appear to have been withdrawn by a senior individual in the firms”.