FCA bans and fines former SVS Securities CEO over conflicts of interest and hidden exit penalty
Demetrios Hadjigeorgiou steered client pension money into high-risk products while SVS took issuer payments, then failed to stop a 10% exit charge customers never knew about.
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Worth reviewing: conflicts of interest and exit charge disclosure for discretionary fund managers and wealth managers.
The FCA has issued a Final Notice against Demetrios Hadjigeorgiou, former CEO of SVS Securities Plc (a discretionary fund manager), banning him from senior management roles in financial services and fining him £56,400. He had received an initial Decision Notice dated 25 April 2024. The action follows a settlement after Hadjigeorgiou withdrew his referral to the Upper Tribunal.
Hadjigeorgiou served as CEO from 1 May 2018 to 7 August 2019. SVS entered special administration on 5 August 2019 and was dissolved on 10 August 2023. During his tenure, SVS invested customers' money, including pension savings, in high-risk products while receiving payments from the companies that issued those products (the Final Notice does not specify the amounts). The FCA found he failed to manage that conflict of interest.
The second failing had a direct financial cost to customers. Hadjigeorgiou failed to challenge a decision that reduced the value of customers' bond investments by 10% when they chose to sell. That undisclosed exit penalty generated £359,800 for SVS at customers' expense, and some lost part of their pension savings as a result. Customers were not clearly told about the reduction.
The FCA found he breached Statement of Principle 6, the obligation on approved persons to exercise due skill, care and diligence in managing a firm's business, and imposed the prohibition order under sections 66 and 56 of the Financial Services and Markets Act 2000.
If your conflicts controls and fee disclosure are in good order, treat this as a prompt to verify rather than a warning shot. The SVS pattern is not unique to one firm. Issuer payments creating undisclosed incentives and exit terms clients only encounter when they want to sell are recurring themes in FCA enforcement action against discretionary managers.
Sources
- FCA fines bans former svs securities ceofca.org.uk
