The Financial Services Authority (FSA) has fined a UK retail stockbroker £250,000 for persistently employing high-pressure sales tactics and misleading customers.

Square Mile Securities, which specialises in smaller UK companies, was criticised for a series of “reckless” and "dishonest" sales practices. These included entering transactions into customer accounts without consent and using high-pressure sales techniques to convince clients to make risky investments.

One customer was telephoned 17 times over a 10-day period while another was warned against making “the silly mistake of not picking up” a particular investment.

Square Mile Securities was also censured for setting up a “remuneration system that encouraged and incentivised its advisers to sell shares without having regard to the quality of the recommendations and advice” [given to customers].

This led sales staff to routinely mislead customers about what they were buying including one instance where a client was told that 20 Square Mile Securities analysts were “excited” about a stock. This was despite the company not having any stock analysts on its staff.

The FSA also criticised the broker’s senior management, which “knew its advisers frequently used unacceptable sales tactics and sometimes failed to get a customer’s consent before selling them high risk shares”.

The FSA said the broker’s failings warranted a fine of £1.5 million, but the regulator reduced the amount because Square Mile was prepared to settle the investigation at an early stage. It also cited the broker’s “financial circumstances” as a reason for the lower fine after Square Mile posted operating losses of £445,069 last year.

Square Mile Securities, which has agreed to make changes to its senior management, said it was “complying willingly and in full” with the FSA. It will send customers a letter detailing the FSA’s findings including information on how they can make a complaint.

Square Mile declined to comment on whether any of the individual sales staff involved in misleading customers were still working for the firm.

An FSA spokeswoman said the watchdog would not be investigating any individuals.

Margaret Cole, the FSA director of enforcement, said: "The FSA will not tolerate any regulated firm coercing customers into buying financial products or services they do not want or can't afford. We are currently reviewing how stockbrokers conduct their business and will not hesitate to take action against any that falls short of the standards we expect.”

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