Shares digital

Mansion House Securities has become the latest in a line of penny share brokers to be fined by the Financial Services Authority (FSA) for treating customers unfairly.

The City watchdog hit the broker with a £122,500 penalty for giving customers unsuitable and inaccurate advice when selling higher risk shares.

The fine follows penalties against Square Mile Securities (£250,000 fine), and Wills & Co (£49,000 penalty).

Margaret Cole, FSA director of enforcement, says: ‘Customers expect their stockbrokers to give them clear information, make suitable recommendations and not use unacceptable sales practices. In failing to do this, Mansion House treated it customers unfairly.’

The FSA reviewed 30 recommendations relating to higher risk shares, made by Mansion House between May 2006 and January 2007. The FSA found that Mansion House’s advisers had given customers inaccurate information and failed to highlight the risks associated with the recommended shares.

The broker’s advisers also used inappropriate sales practices to pressure customers into buying shares. Mansion House’s failings came to light as a result of ongoing visits by the FSA to assess the practices of small firms when selling higher risk shares.

A statement from Mansion House Securities reads: ‘As soon as we learned of the FSA’s concerns, we engaged independent compliance consultants, who have reviewed and, where necessary, overhauled our controls and procedures. We believe these are now robust, and we are fully committed to treating our customers fairly.’

Prior to these three cases, penny shares broker Hoodless Brennan was fined £90,000 by the FSA in 2006 for using unacceptable sales practices to sell shares in Aim companies.

Mansion House is appointing a ‘skilled person’ to assess its systems and sales practices, and to determine any appropriate compensation for customers.