The Financial Services Authority (FSA) has bared its teeth again by announcing fines for RSM Tenon Financial Services Limited (Tenon) of £700,000 for poor systems and controls to prevent unsuitable advice in its pension switching and structured product business.

The FSA also recorded significant failings in advice and sales processes relating to Lehman-backed structure products in its first enforcement action resulting from the FSA's review of the marketing and distribution of structure products, particularly those backed by Lehman Brothers, which concluded in October 2009.

In relation to sales of Lehman-backed structure products, Tenon failed to treat some customers fairly between November 2007 and August 2008, breaching Principle 3 of the FSA's Principles for Business, and Principle 9 by failing to take reasonable care to ensure the suitability of its advice to its customers.

The FSA also found that, in relation to the pension switching business and more generally, the firm failed to have effective risk management systems in place to manage and control its affairs, ultimately failing to prevent of minimise the risk of unsuitable sales.

Tenon will conduct a review of pension switching business between 6 April 2006 and 1 December 2009, to assess the suitability of recommendations made to customers, and if necessary implement a customer redress programme. In addition, it will conduct a past review of all Lehman-backed structure products sales, review sales of these products between 1 November 2007 and 1 December 2009, and instruct a skilled person to review its current sales and compliance processes relating to the sale of all investment products, assessing their appropriateness and the suitability of recommendations made to customer. The FSA will oversee these reviews, and an independent third party will review the actions taken by the firm.

"Firms giving investment advice must ensure they fully assess clients' needs and make suitable recommendations - they must also have the necessary systems and controls in place to demonstrate this," commented Margaret Cole, FSA director of enforcement and financial crime. "We take failure in this area very seriously and the fine and other actions announced today demonstrate our commitment to credible deterrence.

"We will continue to take tough action where we find evidence that firms are giving unsuitable advice to investment."

Chief executive of RSM Tenon, Andy Raynor, said he is "satisfied" that the issues the FSA have highlighted have been addressed. "I am very confident that the new management team of RSM Tenon Financial Services will continue to grow the business in a controlled and compliant manner."

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