FSA fines N&P £1.4m
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The FSA has fined Norwich and Peterborough Building Society £1.4m for failing to give customers suitable advice in relation to the sale of Keydata products.
N&P will make available ex gratia payments to all customers to ensure they do not lose out as a result of their investment, amounting to approximately £51m in total.
Over a three year period N&P advised 3,200 clients to invest in Keydata’s life settlement products.
The FSA says N&P failed to properly assess the financial circumstances of many of its customers, classifying them as having a higher risk tolerance than was appropriate and leading to unsuitable sales.
Some customers were moved out of low risk products such as deposit accounts into Keydata investments, putting their income and capital at risk. Many of these customers were approaching or already in retirement, and could not afford to lose their money.
In June 2007 N&P carried out a review after finding Keydata products made up 30 per cent of all investment products sold during the first three months of the year. Its compliance team produced a report setting out concerns about the suitability of advice given to customers. No effective action was taken and Keydata sales remained consistently high.
FSA acting director of enforcement and financial crime Tracey McDermott says: “N&P failed in its basic duty to provide suitable advice to its customers, despite an internal compliance report pointing out that there were problems as early as 2007.
“Firms cannot treat customers fairly unless they pay attention to their financial circumstances and attitude to risk when they make recommendations. This is the only way to prevent widespread mis-selling like this.”
N&P has also agreed to commission an independent review of sales of other financial products sold by their financial advice service, and will pay redress where appropriate.
N&P chairman Gordon Horsfield says: “The society is committed to its members and has been deeply concerned for those customers who bought these products and who lost out following Keydata’s administration in 2009. Our aim in making ex gratia payments is to put that right and we are very sorry for the hardship and anxiety that they have suffered.”
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Readers' comments (12)
Anonymous | 18 Apr 2011 11:06 am
Easy money. Isn't this a classic example of reaction to failings identified by the industry and public, rather than proactive consumer protection by the FSA?
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Mr Fisher | 18 Apr 2011 11:10 am
Meaningless as N&P are a mutual - so it means the members lose out, not the management or directors whoo walk on assets intact.
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Anonymous | 18 Apr 2011 11:25 am
I assume the FSA are having an Easter party and these funds will just about cover the costs?
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Norm d'Plume | 18 Apr 2011 11:35 am
An IFA would probably have lost his permissions for doing that. How come the senior management escapes scot free - AGAIN??
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Darren | 18 Apr 2011 11:42 am
Goodness me - I presume that the FSA will now investigate every bank that acted as a tied agent for a life company for inappropriate advice.
Could start with Barclay's and move through the rest alphabetically.
Tis a bit unlikely I s'pose!!
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Norm d'Plume | 18 Apr 2011 11:44 am
If I understand it correctly, the difference between RPI & CPI is that housing costs are excluded from CPI.
That being the case, once public sector workers have retired, they've paid off their mortgages, so why would they need the housing cost increases?
However, I'll grant that those living in rented accommodation may need this and that they are probably the less well paid and thus more vulnerable members. Having said that, they are probably also in receipt of some benefit if they are more vulnerable so, perhaps, that argument doesn't apply.
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Exasperated Me | 18 Apr 2011 11:47 am
All these firms allow their CEO to take retirement before the fine hits the papers, in this case after he said time and again that it wasn't his fault, "a big boy did it and away", well it was him and he did run away. How do the "members" of the Society feel now? How many have lost out because they were short-changed by the FSCS upper limit?
What have the regulators done for us?
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Graham Pattinson | 18 Apr 2011 11:48 am
Keydata were regulated and authorised by the FSA!! Being a mutual N & P has no shareholders, so the redress is borne by all of the members! The FSA should be fined for allowing Keydata to be regulated anf authorised so badly by themselves. Let's face it, had Keydata not been authorised by the FSA in the first place, N & P would never have sold the products. Fines merely boost the FSA's coffers and really do nothing for clients.
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hugh Jeego | 18 Apr 2011 2:10 pm
This is like a lifeguard being paid a bonus for spotting drowned people in his swimming baths! Does anybody in the government know what`s going on at the FSA?
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Frustrated | 18 Apr 2011 2:49 pm
Graham and others are quite right - it is the members who ultimately foot the bill. I am a long standing customer of N&P and they have just re-introduced a fee for using an AUTHORISED overdraft by more than £10. I am still trying to get them to explain how they justify that charge when they charge an arragement fee and also interest. How do they justify a charge of £5 for going overdrawn by £10.01 for 24 hours?.
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