The regulator said O’Donnell did not understand the regulatory restrictions on the promotion of Ucis and other non-mainstream investments and failed to promote them compliantly.
He has been banned from performing any function in relation to any regulated activity in the financial services industry.
O’Donnell was the sole director and only approved person working at P3 Wealth Management and so the FSA has also cancelled West Lothian-based P3’s permission to carry on regulated activities.
Last month the FSA indicated it would include consultation on Ucis in its traded life policy investments or "death bonds" consultation.
It said in many instances TLPIs take the form of Ucis, which cannot lawfully be promoted to retail investors in most cases but have often been marketed inappropriately.
This is the first fine the FSA has announced relating to Ucis since it set out intentions to target their promotion.
The City watchdog said although O’Donnell might have honestly thought he was doing best for his customers, he advised many of them to invest almost all of their wealth in one or more illiquid, complex and higher risk investments.
In total he advised 57 clients to invest in Ucis and from a sample of nine files covering 15 customers the FSA found that around two-thirds of O’Donnell’s customers invested over 75% of their known available funds into Ucis and other non-mainstream investments.
Tom Spender, head of retail enforcement at the FSA, said: "Such mis-advice cannot continue. Ucis and other non-mainstream investments are very often high-risk, complex products, which are not appropriate for most retail investors. We will continue to intervene where we find mis-selling."
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