Source: Isle of Man
PUBLIC STATEMENT CONCERNING THE PROHIBITION OF STEPHEN DAVID CRYER – SECTION 10A OF THE FINANCIAL SERVICES ACT 2008 (“FSA”), SECTION 29A OF THE INSURANCE ACT 2008 (“IA”) AND SECTION 11B OF THE COLLECTIVE INVESTMENT SCHEMES ACT 2008 (“CISA”) (COLLECTIVELY “THE ACTS”).
Re Stephen David Cryer
1.1 The Isle of Man Financial Services Authority (the “Authority”) makes this public statement in accordance with powers conferred upon it under section 13 of the FSA.
1.2 The making of such public statement supports the Authority’s statutory objectives of, among other things, securing an appropriate degree of protection for customers of persons carrying on a regulated activity, reducing financial crime and maintaining confidence in the Isle of Man’s financial services industry.
1.3 The Authority conducted an Investigation of a Permitted Person who held a licence issued in accordance with section 7 of the FSA which permitted it to undertake regulated activities of Class 2 – sub-classes (3) and (7). Mr Cryer was employed as a financial advisor with such Permitted Person. The Investigation identified a number of regulatory failings in relation to the Permitted Person’s provision of financial advice to its customers which caused the Authority to assess the fitness and propriety of Mr Cryer. Following that assessment, the Authority has deemed it necessary, and proportionate in all the circumstances, that Mr Cryer be prohibited under section 10A of the FSA, section 29A of the IA, and section 11B of the CISA.
1.4 Mr Cryer is therefore prohibited from:
- performing any function in relation to any regulated activity carried on, or proposed to be carried on, by a permitted person pursuant to section 10A of the FSA;
- performing any function in relation to any activity carried on, or proposed to be carried on, by an authorised insurer, a registered insurance manager or a registered insurance intermediary insurance business, an insurance manager or an insurance intermediary pursuant to section 29A of the IA; and
- being a member of the governing body of a scheme pursuant to section 11B of the CISA.
2.1 Mr Cryer was employed as a senior financial advisor as a key person (Controlled Function R21A) at a Permitted Person licensed to undertake certain investment business and operate as a financial advisor. Mr Cryer held a position of responsibility and trust, providing clients with investment advice.
2.2 In November 2018, the Permitted Person was the subject of a supervisory inspection by the Authority in accordance with its statutory powers under Schedule 2 to the FSA. The findings of the inspection subsequently led to the Authority opening a formal investigation of the Permitted Person in accordance with its statutory powers under Schedule 2 to the FSA.
2.3 Upon identification of certain issues in relation to the provision of financial advice, the Authority had cause to consider whether Mr Cryer continued to satisfy the Authority that he is ‘fit and proper’ to perform one or more functions in relation to a regulated activity carried on, or proposed to be carried on by a Permitted Person under section 10 of the FSA. An individual who holds a key person role is required to satisfy the Authority that they are fit and proper. This ‘test’ is an initial test at licensing and an ongoing one.
3. Investigation conclusions
3.1 In conducting an investigation into the Permitted Person, the investigation identified a range of issues that, on reasonable grounds, brought into question Mr Cryer’s fitness and propriety. Amongst those matters established were that:–
a) Mr Cryer, on at least one occasion, intentionally removed details regarding commission arrangements from communications with a client(s) of the Permitted Person and failed to make them aware of all relevant commission arrangements;
b) Mr Cryer, on at least one occasion, applied a client’s signature (on such client’s behalf) to a client file with the Permitted Person with no recorded rationale, instruction, authority or direction to that effect and in the absence of such client witnessing the same;
c) Mr Cryer incorrectly and deliberately recorded files as ‘execution only’ whilst providing ‘limited advice’. This practice was contrary to regulatory requirements and failed to ensure the suitability of the overall advice provided to its clients;
d) Mr Cryer, in a compelled interview where he was legally obliged to give information that was true and not misleading, in furnishing information to the Authority made statements which he knew to be false or misleading in a material particular, a potential criminal offence under section 40 of the FSA;
e) Mr Cryer, in arranging and facilitating a pension transfer undertaken by the Permitted Person, facilitated a potentially unauthorised member payment through the Permitted Person receiving an advisor charging fee that was not a genuinely commercial remuneration arrangement between the client and the Permitted Person for the pension advice given by the Permitted Person to the client, and sharing 90% of that fee with the client.
The Authority is satisfied that the imposition of the Prohibition reflects the serious nature of the lack of integrity of Mr Cryer identified by the investigation and that this public statement will encourage others to comply with the legal and regulatory requirements and obligations that are fundamental to the conduct of business in the regulated sector, particularly those that sit at the heart of ‘treating customers fairly’.
In accordance with the Authority’s Enforcement Decision-Making Process, Mr Cryer entered into settlement discussions with the Authority and, having accepted the investigation conclusions, sought to finalise matters expeditiously.
Having been made aware of the assessment of his fitness and propriety by the Authority, Mr Cryer engaged positively in concluding the investigation and accepting this prohibition.
6. Key Learning Points for Industry
- The overriding culture pervading all financial advisor businesses needs to be that of ensuring that customers are treated fairly.
- The rules set out in the Financial Services Rule Book 2016 (as amended and updated from time to time), as applicable to the provision of financial advice, are intended to ensure that customers are treated fairly, within an environment that is transparent allowing and empowering customers to make fully informed decisions. The Authority’s ‘step by step’ guidance for financial advisors offers clarity on the advisory process to be followed.
- Financial advisors should treat customers fairly at all times and ensure that remuneration for their work is transparently disclosed to customers.
- People who are compelled to attend an interview with the Authority must answer questions truthfully and are legally obliged not to deliberately or recklessly make a statement which is false or misleading in a material particular.
- People in the regulated sector must demonstrate the strongest set of morals, ethics and integrity at all times.