Last week the FCA announced that it had banned Mr John Chiesa and his wife Mrs Colette Chiesa from working in financial services for the “calculated way” that they deceived creditors after going into “sequestration” (the Scottish term for bankruptcy). Mrs Chiesa was also fined £50,000 for attempting to mislead the FCA during an FCA interview.

Mis-selling of geared traded endowment policies (“GTEP”)

The husband and wife duo were founding partners of Scottish IFA Westwood Independent Financial Planners (“Westwood”), an unlimited liability firm authorised by the FCA to provide personal investment advice.

The FCA sanctioned Westwood in May 2011 for “mis-selling” GTEP products to clients and shortly afterwards Westwood became insolvent and went into sequestration.

The couple, with unlimited liability in Westwood, had significant liabilities arising from numerous claims that had been filed with the Financial Ombudsman Service against Westwood relating to their GTEP advice.

Mis-leading creditors

A trustee was appointed in late 2011 to look into the winding down of Westwood and establish the value of its assets and liabilities in order to assess the couple’s ability to pay back their creditors, however, the Chiesas failed to reveal details of their true financial situation. The couple concealed their interest in an unregulated company with the potential to pay more than £1m annually into an off-shore remuneration trust.   The remuneration trust paid the Chiesas a total of £2.6m (averaging £84,000 per month) in the form of loans between April 2012 and December 2014 – the FCA believed that Chiesas never intended to repay the loans. The couple were only paying £200 per month towards their creditors at this time and had considerable living and personal expenses regularly pail by the unregulated company, which included rent on a London address of around £5,000 per month.

The FCA concluded that Mr and Mrs Chiesas had made “inadequate, incomplete and misleading” disclosures to the trustee in respect of their assets, to avoid the trustee recovering assets for the benefit of their creditors. Mark Steward, Director of Enforcement and Market Oversight at the FCA said: “Mr and Mrs Chisia mislead their creditors, especially the FSCS (Financial Services Compensation Scheme), in a calculated way, their misconduct demonstrates a serious lack of integrity”.

Clients of Westwood who lost money as a result of the mis-selling of GTEP products received compensation amounting to over £3.8m from the FSCS a government fund to support the victims of FCA regulated firms that go into liquidation.