The FSA concluded that Mr Nagaty's failings constituted breaches of its Statements of Principle for Approved Persons and has prohibited him from undertaking any significant influence function in any authorised firm until at least 1 September 2007.
The FSA found that Mr Nagaty:
- failed to ensure that the firm was properly organised and managed;
- failed to ensure that sales of precipice bonds made by the firm's advisers were sufficiently scrutinised;
- in practice relied on the firm's sales advisers to select the customer files which he reviewed and conducted compliance visits to advisers in hotels rather than visiting them at their offices, and
- failed to ensure that the firm's complaints handling process was of an adequate standard and that customers who complained were treated fairly as a matter of course.
Margaret Cole, FSA Director of Enforcement, said: "One of the FSA's statutory objectives is to secure the appropriate degree of protection for consumers and in doing so we have a responsibility to ensure that the senior management of authorised firms adhere to our rules. Our investigations concluded that Idris Nagaty is not a fit and proper person to manage a regulated firm and we took the necessary enforcement action of prohibition as a consequence.
"This case shows that the FSA is not prepared to tolerate senior management failures. Ultimately it is the responsibility of senior staff to ensure that the firm complies with our rules and high level principles of Treating Customers Fairly."
Young Ridgway & Associates Limited, which went into voluntary liquidation in May 2004, provided financial advice to over 10,000 individuals through a team of approximately 30 financial advisers. The firm's principal activity was the sale of investment products to retired individuals with a low or low to medium risk profile. However from 1999 there was a clear pattern of precipice bonds being sold by its advisers, many of which sales generated customer complaints.
Mr Nagaty breached a number of the FSA's Statements of Principle for Approved Persons and failed:
- to act with due skill, care and diligence in carrying out his controlled functions;
- to take reasonable steps to ensure that the business of the firm was organised so that it could be controlled effectively;
- adequately to supervise and monitor the members of the firm's sales force and to take appropriate action to ensure that a member of the firm's investment staff in respect of whom complaints had been received was complying with his obligations, and
- to take reasonable steps to ensure that the business of the firm complied with the relevant requirements and standards of the regulatory system. He failed to ensure that adequate and appropriate systems and controls were in place, particularly with regard to ensuring the suitability of sales and the firm's procedures for the handling of complaints.
