The FSA says B&B did not make suitable recommendations to customers, did not maintain adequate records of sales and did not have in place adequate systems and controls to prevent and ultimately address these failures. The firm’s misselling of precipice and with-profits bonds was made more serious because it was warned on a number of occasions from 1998 onwards that there were significant issues with the quality of its customer records but failed to act.
B&B says it has now conducted a thorough investigation into the circumstances surrounding this period of misselling and has retrained its advisers and implemented new systems and controls in relation to its sales and checking processes.
Syndaxi Financial Planning director Robert Reid believes this judgment could be the thin end of the wedge with regard to misselling of with profits bonds. He says direct salesforces are more likely to be hit by the regulator than IFAs.
FSA director of enforcement Andrew Procter says: “During the period in question, B&B was the largest IFA in the UK and its brand had widespread public recognition which raised among its customers the expectation that the service it provided to them would be of a high standard.
“However, B&B’s advisers sold precipice and with-profits bonds without having in place adequate systems and controls to ensure the products sold were suitable. The FSA has repeatedly stressed to firms through supervision and guidance the importance of keeping adequate records of sales but B&B failed to do so in these cases.”