65% Of N&P Keydata sales unsuitable
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The FSA has fined Norwich & Peterborough Building Society £1.4m and revealed that 65 per cent of reviewed Keydata sales were found to be based on unsuitable advice.
The regulator says that based on its more limited file review, the level of unsuitable sales is likely to be significantly higher.
N&P will also have to pay red-ress to customers who bought Keydata products through the society, totalling about £51m.
In March, the society ann-ounced that it had set aside £57m to make these repayments, including payments already made to N&P customers via the Financial Services Compensation Scheme.
Between November 2005 and March 2009, N&P advised 3,200 customers to invest in Keydata products, investing £53.1m.
A total of 5,051 policies were bought, with some custom- ers buying more than one policy, generating £2.7m in gross commission. The FSA’s final notice states that some N&P customers sought guaranteed income or capital growth, which the Keydata products could not provide.
Some customers were advised to move out of lower-risk products such as deposit accounts to invest in Keydata products. Over half of the customers sampled were advised to place 20 per cent or more of their total available funds into the products and over 10 per cent were advised to invest more than half of their total available funds. The average age of customers was 62.
Highclere Financial Services partner Alan Lakey says: “The fine seems quite low. The flaws in N&P’s sales processes were endemic, this was not the fault of one individual adviser. These are serious issues and the fine is meant to represent the punishment.”
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