FINAL NOTICE

TAKE NOTICE: The Financial Services Authority of 25 The North Colonnade,
Canary Wharf, London E14 5HS (“the FSA”) has taken the following action:

1.
ACTION

1.1.
By an application dated 31 December 2009 (the Application) the FSA received
an application from a firm (“Firm A”) under section 60 of the Financial
Services and Markets Act 2000 (“the Act”) for approval of Mr Paul Maguire
("Mr Maguire") to perform the customer function (CF30).

1.2.
On 11 May 2010 the FSA received notification from Firm A that it no longer
wished to proceed with the Application. Mr Maguire’s consent to the
withdrawal was required so that the Application would be formally withdrawn
within the provisions of section 61(5) of the Act. Mr Maguire did not give
such consent and therefore the FSA was required to determine the application.

1.3
For the reasons listed below and pursuant to section 52(7) of the Act, the FSA
has decided to refuse the Application.

2.
REASONS FOR THE ACTION

2.1
As Firm A has withdrawn its support for the Application, no arrangement
within the terms of section 59(1) of the Act exists and the FSA is therefore
required to refuse the application. In addition, on the basis of the facts and
matters described below, the FSA is not satisfied that Mr Maguire is a fit and
proper person to perform the controlled functions to which the Application
relates.

2.2
The FSA may grant an application for approval under section 60 of the Act
only if it is satisfied that the person in respect of whom the application is made
is a fit and proper person to perform the controlled function to which the
application relates (section 61(1) of the Act).

2.3
Section 62(3) of the Act requires the FSA, if it decides to refuse the
application, to issue a Decision Notice to each interested party. Both
Mr Maguire and Firm A are interested parties.

2.4
Under section 59(1) of the Act, no individual person may perform a controlled
function other than under an arrangement entered into with an authorised
person which has been approved by the FSA to carry out a regulated activity.
The authorised person in this case, Firm A, has withdrawn its support for the
Application, therefore no arrangement within the terms of section 59(1) of the
Act exists.

2.5
The Fit and Proper test for Approved Persons ("FIT") sets out the criteria that
the FSA will consider when assessing the fitness and propriety of a person to
perform a particular controlled function.

(1)
The most important considerations include the person’s honesty,
integrity and reputation and competence and capability (FIT 1.3.1G).

(3)
In determining a person’s competence and capability, the matters to
which the FSA will have regard include whether the person has
demonstrated by experience and training that the person is able, or will
be able if approved, to perform the controlled function.

3.
FACTS AND MATTERS RELIED UPON

Mr Maguire’s references

3.1.
Mr Maguire’s previous employer informed the FSA that it had concerns about
Mr Maguire’s work, stating that there was “a potential risk to consumers,
mainly in relation to PP (personal pension) switches and Bonds... Virtually
100% of business was PP switches, many of which were failed under
(Mr Maguire’s former employer’s) pre-approval file checking system”. It also

stated “numerous PP transfer cases submitted for preapproval raised serious
concerns regarding the suitability of the proposed contracts (mostly personal
pension as opposed to cheaper/more flexible stakeholder pensions). There was
also insufficient research on possible company pension arrangements. 48% of
files failed and this adviser gave us serious cause for concern” (our emphasis).

File reviews

3.2.
The FSA obtained file review data in respect of business carried out by
Mr Maguire in the most recent twelve month period which showed that
approximately 50% of the files that were reviewed failed that internal
compliance review.

3.3.
In addition, the FSA obtained copies of seventeen file reviews carried out on
Mr Maguire’s work. Of the seventeen file reviews provided in total, seven
passed, nine failed, and one was ungraded. In relation to the seventeen file
reviews that were provided to the FSA, of the nine files that failed, five files
were graded ‘5’ on a scale of 1 to 5, where 5 indicates a “seriously inadequate
file”.

3.4.
Of those file reviews seen by the FSA among the reasons that files were
recorded as having failed were:

(1) insufficient justification or proof of research and reasons for the
recommendation;

(2) insufficient commission disclosure in the suitability report and misleading
information about charges;

(3) recommendations not suited to the client’s needs/circumstances;

(4) insufficient consideration of other options;

(5) a factual inaccuracy being used to justify a recommendation;

(6) attitude to risk section of the fact find not being completed;

(7) existing arrangements being better than the fund offered;

(8) insufficient information being collected about the client’s current
circumstances; and

(9) insufficient reasons for discounting stakeholder pensions, in circumstances
where it appeared that a stakeholder pension would be more appropriate
than the recommendation.

3.5.
The FSA regards the practice of pension switching to be a high-risk activity
with significant scope for client detriment. This concern has been widely
publicised as a result of a thematic review of advice on pension switching
undertaken in 2008 and subsequent work undertaken by firms. From
information received from Firm A for the business conducted in the last

twelve months, it is clear that Mr Maguire had done 44 personal pension
scheme transfers (amounting to 80% of his pensions business) in that period.

Impact on fitness and propriety

3.6.
The foregoing facts and matters call into question Mr Maguire’s competence
and capability and thereby cause the FSA to doubt that Mr Maguire is fit and
proper to perform the CF30 function.

4.
REPRESENTATIONS, FINDINGS AND CONCLUSIONS

Representations

4.1
Mr Maguire submitted that he was a fit and proper person. He contended that
he was competent and capable of performing the controlled function which
was the subject of the application. However, he also accepted that the
application would have to be refused as there was no longer in existence an
arrangement with Firm A and thus the firm had formally withdrawn its
application.

4.2.
Mr Maguire accepted that there had been problems, as disclosed by the file
reviews, with some of the work that he had done. Mr Maguire agreed that the
reviews had correctly identified weaknesses in his work and that,
consequently, there was a “clear ongoing need for close supervision in areas of
business where there may be a real risk to a consumer”. However,
Mr Maguire contended that he had heeded the feedback he had received in
relation to the files which had failed the reviews and that, by the end of his
time with his most recent former employer, his files were of an acceptable
standard and that he was, therefore, verifiably, a competent adviser. In
support of this contention Mr Maguire pointed to the improved scores given to
his files in the reviews conducted in the latter months of his time with his
erstwhile employer. Mr Maguire also submitted that, in addition to having
certified that he was competent when they first employed him, his former
employer had also made observations in various documentation which showed
that, prior to his departure, it had considered that his work was of a good, or at
least reasonable, standard.

4.3
Mr Maguire further submitted that the improvement in his files came in spite
of the flawed procedures and protocols of his former employers. Mr Maguire
complained that his former employers placed little emphasis on training and
support whilst they rarely provided direct feedback. Mr Maguire added that
his most recent former employer compounded these failings by judging files
against standards which exceeded that which was required by the FSA.

4.4.
In the light of the criticisms Mr Maguire made of his former employer he
added that the FSA should be cautious about being over-reliant upon its file
reviews. In particular Mr Maguire sought to defend the quality and
impartiality of the advice that he had given to his clients and to contrast this
with the limited support he had received from his former employer. Amongst
other examples Mr Maguire noted that he had not been advised until some
months into his employment about the existence of certain products which

may have been more suitable for his clients. Mr Maguire explained that the
systems which were used by his employer incorporated search tools which had
excluded from his consideration these more suitable products. Mr Maguire
explained that, in some cases, he had agreed with his clients that the product
he would recommend would charge commission thereby ensuring that his
clients did not need to pay him a fee. Unfortunately the software which he
used to identify suitable products for his clients failed to recommend the most
appropriate product as the parameters of the search included the need for
commission to be payable. Nonetheless, Mr Maguire insisted that, to his
knowledge at the time, the products he recommended had been the best suited
to his client’s needs. He added that, when he was finally told of the existence
of other better suited products, he altered his advice accordingly.

4.5.
Mr Maguire added that it was not commonplace for an adviser to look at
guidance from the FSA and that, instead, he was reliant upon the guidance and
support of his former employers. Therefore, he asserted that his failings were
in fact the failings of his employers. Nonetheless he maintained that, by the
time he left his former employer, his advice was of a good standard. He noted
that Firm A had clearly found him to be competent and capable as it had
offered him a role. He further submitted that, despite its withdrawal from the
application process, Firm A retained confidence in him and would be prepared
to offer him employment were he to satisfy the FSA that he is a fit and proper
person.

4.6.
In addressing the reasons underlying Firm A’s withdrawal from the
application process Mr Maguire complained that the FSA had put pressure on
Firm A to withdraw. However Mr Maguire did not place any great reliance on
this point, focusing instead on the submission that its continued interest in him
demonstrated the confidence others had in his abilities.

4.7.
The FSA is not satisfied that Mr Maguire is competent and capable to perform
the controlled function to which the application pertains. The FSA therefore is
not satisfied that Mr Maguire is a fit and proper person and thus the
application is refused on this basis in addition to the fact that no arrangement
continues to exist between the authorised person and Mr Maguire and that
Firm A has therefore withdrawn the application.

4.8.
The FSA notes that the evidence of the file reviews was not greatly disputed.
Indeed the FSA notes that Mr Maguire accepted that some of his work had
been deficient in a number of regards including poor quality; suitability letters;
research; and advice. Therefore, the FSA is satisfied that it can rely upon the
file reviews as being accurate assessments of the quality of Mr Maguire’s
work for the various clients. The FSA notes that the evidence of the file
reviews demonstrates that in the region of half of Mr Maguire’s cases, which
were checked in the relevant twelve month period, failed his firm’s internal
compliance review. Notable concerns identified included insufficient
justification for recommendations and unsuitable advice. In particular five of
his cases were deemed to be “seriously inadequate files”. Moreover the file

reviews over the period indicated that the same concerns were arising
frequently in respect of advice given by Mr Maguire.

4.9.
The FSA does not accept Mr Maguire’s explanation for why his files came to
be graded so poorly. In particular the FSA finds that, regardless of the support
or training he received from his former employers, a number of the problems
with Mr Maguire’s work were his responsibility. The FSA finds that
Mr Maguire; undertook inadequate research on the products he was looking to
advise upon; conducted poor analysis; did not advise suitable products to his
customers; and erred in focusing upon products that paid commission.

4.10. The FSA is not persuaded that Mr Maguire had rectified these failings by the
time he had left his former employer. Whilst the FSA finds that the scores on
his file reviews had improved, the FSA also finds that there were continuing
deficiencies in his work. Moreover, the FSA finds that, notwithstanding the
excerpts of some e-mails relied upon by Mr Maguire, his former employer
appeared, immediately prior to his departure, to lack confidence in
Mr Maguire’s competence and capability to discharge the CF30 role. The
FSA is also concerned that, despite having held the CF30 controlled function
for almost three years, Mr Maguire only belatedly took any action to address
some of the points raised in these file reviews. The FSA also notes that
Mr Maguire did not appear to have proactively taken steps to improve his
competence and capability.

4.11. The FSA finds that the failings in Mr Maguire’s work that were exposed by
the file reviews betray a lack of competence and capability. The FSA is not
satisfied that these failings had been rectified by the time that Mr Maguire left
his former employer. The FSA is also not satisfied that Mr Maguire has
addressed his lack of competence and capability during the period that his
application has been determined by the FSA. Therefore, the FSA is not
satisfied that Mr Maguire is a fit and proper person because he lacks
competence and capability.

4.12. The FSA accepts that, though Firm A had withdrawn its support for the
application, the firm may have intended to employ Mr Maguire had his
application only been refused on the basis of its withdrawal. However, the
FSA finds that Firm A had not been encouraged or pressured by the FSA into
withdrawing its support for the application.

Conclusions

4.13. In the absence of an arrangement between Mr Maguire and a regulated firm,
within the terms of section 59(1) of the Act, the FSA cannot approve
Mr Maguire to perform a controlled function.

4.14. In addition, in light of the matters set out above, the FSA concludes that it
cannot currently be satisfied that Mr Maguire is a fit and proper person to
perform the controlled function to which the application relates because he
lacks competence and capability.

5.
IMPORTANT NOTICES

5.1.
This Final Notice is given to you pursuant to Section 390(1) of the Act.

5.2.
Sections 391(4), 391(6) and 391(7) of the Act apply to the publication of
information about the matter to which this Final Notice relates. Under those
provisions, the FSA must publish such information about the matter to which
the Final Notice relates as the FSA considers appropriate. The information
may be published in such manner as the FSA considers appropriate. However,
the FSA may not publish information if such publication would, in the opinion
of the FSA, be unfair to you or prejudicial to the interests of consumers.

5.3.
The FSA intends to publish such information about the matter to which this
Final Notice relates as it considers appropriate.

FSA Contacts

5.4.
For more information concerning this matter generally, you should contact
Andrew Freeman, Manager, Permissions department at the FSA (direct line
020 7066 9786 / e-mail: andrew.freeman@fsa.gov.uk).