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FCA

FCA

Financial Conduct Authority (UK)

Medium Impact

FCA Decision Notice: Proposed £84,600 Penalty and Prohibition for Former SVS CEO over Model Portfolio Failings

Published

Aug 18, 2026

Topics

Enforcement, Senior manager accountability, Discretionary fund management, Conflicts of interest, Inducements and commissions, Product governance, Retail pension customers, Client disclosures

Executive Summary

The FCA has issued a Decision Notice dated 25 April 2024 against Demetrios Christos Hadjigeorgiou, former CF1 Director and CF3 Chief Executive of SVS Securities Plc. The FCA has decided to impose an £84,600 financial penalty and prohibit him from performing senior management or significant influence functions in relation to regulated activities. The decision is not final: Mr Hadjigeorgiou has referred it to the Upper Tribunal, so the FCA’s findings are provisional. The case concerns SVS’s discretionary model portfolios for retail pension customers, including alleged failures to manage conflicts, conduct adequate due diligence, comply with inducement restrictions, address concentration risk and disclose a 10% mark-down applied to fixed-income disinvestments. The notice does not create new rules or reporting templates, but it is a significant enforcement signal for wealth managers, discretionary fund managers, SIPP-related businesses and senior managers. Firms should treat it as a prompt to evidence that product selection, third-party payments, conflicts escalation, investment committee decisions and customer charge disclosures are controlled, documented and challengeable.

What Changed

newProposed individual enforcement sanction

Previous

No final FCA sanction against Mr Hadjigeorgiou had been implemented for the conduct described in the Decision Notice.

New

The FCA has issued a Decision Notice proposing a financial penalty and prohibition order, subject to the Upper Tribunal process.

modifiedEnforcement application of conflicts-of-interest controls

Previous

Existing SYSC rules required firms to identify, keep updated records of, and manage or disclose conflicts of interest.

New

The FCA found that the relevant conflicts were not adequately identified, escalated or managed in the SVS model portfolio business.

modifiedProduct governance and investment due diligence expectations

Previous

Existing PROD 3.3 rules required distributors to understand financial instruments, assess compatibility with the target market and distribute products only in clients’ best interests.

New

The FCA found that due diligence was treated as a formality for certain high-risk, illiquid fixed-income investments and was insufficient to evidence compliance.

modifiedInducements and third-party commission risk

Previous

COBS 2.3A.15R, in force from 3 January 2018, prohibited firms from accepting third-party commission in the provision of a relevant service to retail clients.

New

The FCA found the commission model put SVS’s independence at risk and compromised its ability to act in customers’ best interests.

modifiedDisinvestment mark-down and customer disclosure

Previous

Before November 2018, the notice states SVS did not charge customers when they disinvested from the Model Portfolios.

New

The FCA found the mark-down generated £359,800 income for SVS at customers’ expense and was not properly communicated to customers, SIPP trustees or advisers.

Business Impact

Who is affected

Directly affected

UK FCA-authorised discretionary fund managers, wealth managers, investment advisers, SIPP-related investment providers and senior managers responsible for product governance, conflicts, inducements and customer disclosures.

Indirectly affected

SIPP trustees and administrators, financial advisers, introducer oversight teams, compliance monitoring, internal audit and fixed-income product providers seeking distribution into retail portfolios.

Jurisdictions

United Kingdom

Business processes

Discretionary model portfolio product approval and ongoing review, Conflicts of interest identification, register maintenance, escalation and mitigation, Third-party commission, inducement and introducer payment controls, Due diligence on high-risk, illiquid or related-party investments, Investment committee governance, minutes and challenge evidence, Client disclosure of charges, mark-downs, spreads and disinvestment consequences, Senior manager fitness, propriety and accountability assessments

Estimated effort

Medium

Compliance risk

High

Affected Reports

Conflicts of Interest Register and conflicts escalation logsProduct due diligence and target market assessment files for model portfolio investmentsInducements, commissions and third-party payments registerInvestment committee packs and minutes for product approval, concentration-risk and disinvestment decisionsClient disclosure, order execution and disinvestment charge communications control
FieldValidation rule

Recommended Actions

7 suggested next steps· derived from source analysis
  1. 1
    AI generatedStep 1 of 7

    Reconcile all third-party payments, commissions, loans, marketing fees and introducer payments against COBS 2.3A.15R and document why each is permitted or stopped.

  2. 2
    AI generatedStep 2 of 7

    Refresh conflicts procedures so related-party roles, provider financing, advance payments and staff/director interests are escalated to Compliance, recorded and approved before investment or distribution decisions.

  3. 3
    AI generatedStep 3 of 7

    Strengthen due diligence standards for illiquid fixed-income products, including evidence of product understanding, target-market compatibility, concentration risk, liquidity risk and ongoing monitoring under PROD 3.3.

  4. 4
    AI generatedStep 4 of 7

    Require investment committee minutes to record dissent, unresolved information gaps, prior regulator concerns, and rationale for proceeding despite risk or conflict issues.

  5. 5
    AI generatedStep 5 of 7

    Review disinvestment, exit-charge, spread and mark-down practices to ensure customers, advisers and SIPP trustees receive clear written disclosure before decisions are made.

  6. 6
    AI generatedStep 6 of 7

    Test introducer, adviser and SIPP trustee distribution chains for financial incentives that could compromise customer best interests or create undisclosed conflicts.

  7. 7
    AI generatedStep 7 of 7

    Add compliance monitoring samples covering product-provider payments, conflicts register completeness, investment due diligence packs and customer charge disclosures.

Timeline

effective date

Jan 3, 2018

Start of the Relevant Period in the Decision Notice; the notice also states that COBS 2.3A.15R and relevant PROD 3 rules came into force on this date.

other

May 1, 2018

Mr Hadjigeorgiou was approved to perform the CF3 Chief Executive function at SVS, in addition to his CF1 Director function.

other

Nov 1, 2018

SVS entered into an agreement with ICFL to invest £10 million of Model Portfolio customer funds and receive £1 million commission, including £750,000 paid upfront.

other

May 30, 2019

The notice states SVS made written disclosure of the disinvestment change after six months, but referred only to a wider spread and did not identify the 10% mark-down rate.

implementation

Aug 2, 2019

End of the Relevant Period; the FCA imposed further requirements on SVS requiring it to cease all regulated activities, safeguard assets and notify affected third parties.

other

Aug 5, 2019

SVS was placed into Special Administration.

other

Feb 17, 2023

Warning Notice dated 17 February 2023 was given to Mr Hadjigeorgiou.

publication

Apr 25, 2024

FCA Decision Notice dated 25 April 2024; the notice states the matter has been referred to the Upper Tribunal, making the findings provisional.

Sources

AI-generated analysis is based on the following primary sources. Always verify against the official publication.

Related Evidence

Verified source support for this analysis

The evidence agent checks whether the drafted finding is supported by official publications and relevant public source material.

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