An unauthorised financial adviser in the UK has been sentenced to four years in jail for fraudulent trading and carrying out regulated activities without a licence.
Ian James Hudson, 55, was sentenced by Judge David Tomlison at London’s Southwark Crown Court on Monday. The four-year sentence will be followed by two additional terms of 14 months for carrying out regulated activities without authorisation, the Financial Conduct Authority said.
Hudson was charged by the FCA in May after an investigation found that between January 2008 and July 2019 he advised clients on regulated mortgages, pensions and other investments.
The adviser “purported to invest significant deposits received by him from clients on their behalf”, the regulator said in a statement.
In total, Hudson received about £2 million ($2.7m) from clients, which they deposited through his business, Richmond Associates. He used those deposits to repay existing clients, make payments to other people and fund his own lifestyle, the FCA said.
“Mr Hudson’s defrauding was calculated and persistent over a number of years, preying on victims who believed he was a financial adviser and trusted friend when he was neither of these things,” said Mark Steward, executive director of enforcement and market oversight at the FCA.
Consumer trust in independent financial advisers in the UK is at a record low, according to a March survey by retirement financial adviser My Pension Expert.
About 60 per cent of respondents to the survey said they do not trust independent financial advisers while 26 per cent said they had been pressured by an adviser into buying a financial product.
However, 78 per cent of adults want to see unethical financial advisers face harsher punishments, the survey, which polled more than 2,000 adults, found.
“Meanwhile, a similar number – 73 per cent – believe that tighter regulations surrounding financial advice would help to restore trust,” My Pension Expert said.
In the UAE, consumers face similar trust issues with financial advisers.
In 2018, Neil Grant, a Scottish financial adviser who ran Prosperity Management Consultancy, was convicted by the Dubai Criminal Court for operating his business without a licence. He was fined Dh2,000 and is no longer in the UAE.
Some of Grant's clients, including Amber Waheed, a business strategist in Dubai, filed a criminal complaint against him after being duped into signing up for five long-term fund investments they believed were low risk.
Ms Waheed lost her life savings of $80,000. However, a civil case was filed after Grant’s conviction and in November 2018, a court-appointed financial expert recommended that he was liable for her losses. She has since written a book about her experience.
After numerous complaints from consumers who had been mis-sold long-term savings products in 2016, the UAE’s Insurance Authority announced a range of proposals to overhaul the local financial services sector and how savings, investments and insurance policies are sold.
In October last year, the regulator unveiled the new regulations, which are aimed at streamlining life and family takaful insurance products to reduce mis-selling by financial advisers and better protect consumers.
The regulatory body also imposed increased disclosure requirements on financial advisers, who must provide customers with a benefit illustration before the policy begins and a policy statement every six months.