FCA censures EFG Limited over ‘misleading’ financial promotions
The Financial Conduct Authority (FCA) has censured Equity for Growth (Securities) Limited (EFG) for approving financial promotions relating to minibonds that were deemed unfair, unclear and misleading.
These financial promotions failed to disclose high commission fees charged by its appointed representatives (ARs) and other introducers for marketing the minibonds to investors.
As an authorised firm, EFG was able to approve financial promotions on behalf of unregulated firms that were seeking to raise money through the issuance of minibonds.
These promotions also failed to state that the fees would be deducted from investors’ money. The regulator has said this meant they couldn’t make a fully informed decision before investing.
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FCA joint executive director of enforcement and market oversight Therese Chambers said: “Investors can’t make informed decisions without key information.
“Firms must make sure that the financial promotions they are approving are transparent about the high commissions taken from people’s money and the impact those charges have on their investments.”
Following an FCA petition and restrictions to prevent the firm from conducting regulated activities, the High Court has ordered EFG to be shut down on the basis that it is insolvent.
The regulator has decided not to impose a financial penalty but if it had, this would have been £386,467 – comprising disgorgement of £96,367 and a punitive element of £290,100.
Investor claims will be assessed by the Financial Services Compensation Scheme (FSCS).
