FCA fines and bans wife and bans husband financial advisor for lack of integrity

Mr and Mrs Chiesa were founding partners of Westwood Independent Financial Planners (Westwood), a firm authorised by the FCA to provide personal investment advice.

Following action taken by the Financial Conduct Authority in May 2011 over mis-selling of geared traded endowment policies (GTEP products), Westwood became insolvent and went into sequestration, the term used in Scotland to describe bankruptcy.

Westwood, and therefore Mr and Mrs Chiesa as partners with unlimited liability in Westwood, had significant liabilities arising from numerous valid claims filed with the Financial Ombudsman Service relating to the advice offered on GTEP sales.

In late 2011, a Trustee was appointed to establish the value of the Chiesas’ assets and liabilities, so an assessment could be made which would allow them to pay creditors.  

Mr and Mrs Chiesa made inadequate, incomplete and misleading disclosures to their Trustee about their financial situation during their sequestration, in order to avoid the Trustee inquiring into, and potentially recovering, assets for the benefit of their creditors. 

For example, Mr and Mrs Chiesa failed to disclose their continued beneficial interest in an unregulated company that was capable of paying over £1 million per year into an off-shore remuneration trust for their benefit. 

This trust paid to Mr and Mrs Chiesa a total of approximately £2.6 million between April 2012 and December 2014, at an average of over £84,000 per month. The payments were in the form of loans which, in the FCA’s view, were never intended to be repaid.

Mr and Mrs Chiesa also failed to disclose that the unregulated company regularly paid significant personal and living expenses on their behalf, including rent on a London address of around £5,000 per month. Between October 2011 and July 2013 Mrs Chiesa spent on average £6,000 per month on clothing, jewellery, interior design, cosmetic dental treatment, travel and her Porsche car. Between August 2011 and December 2014, Mr Chiesa spent on average £12,000 per month on flying lessons, tennis tickets, football tickets and club membership.

During the sequestration process Mr and Mrs Chiesa each paid only £200 per month towards their creditors.

Customers who lost significant sums due to Westwood’s mis-selling received compensation from the Financial Services Compensation Scheme (FSCS). By late 2016 the FSCS had paid out over £3.8 million. Westwood’s liabilities to these customers were therefore borne by the financial services industry. 

Mark Steward, Executive Director of Enforcement and Market Oversight, said: 

'The Chiesas misled their creditors, especially the FSCS, in a calculated way. Their misconduct demonstrates a serious lack of integrity.'

About the FCA

1. Final notices for Mr John Chiesa[1] and Mrs Colette Chiesa[2].
2. Westwood Independent Financial Planners is a trading name of the authorised firm Westwood, a partnership formed with unlimited liability under Scots law. The firm reference number is 179905. The Firm also traded as Westwood Independent Financial Advisers.
3. Westwood Trustees Limited, the unregulated company used by the Chiesas, is a limited company registered at Companies House with company number SC182931. On 15 September 2016 the company name was changed to Asset House Piccadilly Limited.
4. Mr and Mrs Chiesa agreed to settle the case on 15 September 2017. No settlement discount applies to the financial penalty imposed on Mrs Chiesa.
5. The Tribunal issued a decision[3] dismissing Westwood’s reference on 22 November 2013. The FCA then issued a Final Notice to the firm[4] on 17 December 2013.
6. On 13 July 2017, the Tribunal issued a decision[5] dismissing Mr and Mrs Chiesa’s application for disclosure of materials within the FCA’s possession evidencing the internal decision-making of the Enforcement Division in commencing and then pursuing regulatory investigations, and, thereafter, regulatory proceedings against Mr and Mrs Chiesa.
7. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
8. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
9. Find out more information about the FCA[6].