The FSA has fined Credit Suisse UK £5.95m for systems and controls failings over sales of structured capital at risk products by its private bank.
Credit Suisse must also carry out a costly past business review, overseen by an independent third party, in relation to Scarp sales.
Between January 2007 and December 2009, 623 Credit Suisse UK customers invested over £1bn in 1,701 Scarps.
During that period, there were a number of serious failings in Credit Suisse’s systems and controls in respect of those sales, including inadequate assessments of customers’ attitudes to risk.
Concerns were identified by the FSA during a supervisory visit to the firm, which led it to commence an enforcement investigation. The FSA found that Cre-dit Suisse UK had poor systems and controls in place and failed to maintain adequate records regarding its advice on these products. As a result, customers were exposed to an unacceptable level of risk of being sold a Scarp that was unsuitable.
If a customer is found to have been advised to buy an unsuitable product under the past business review, Credit Suisse UK will pay redress to ensure they have not suffered financially.
Credit Suisse UK agreed to settle at an early stage, entitling it to a 30 per cent discount on the fine.
FSA acting director of enforcement and financial crime Tracey McDermott says: “A proper assessment of customers’ individual needs and circumstances is even more critical where firms are selling complex products such as Scarps.”
A Credit Suisse spokeswoman says: “We deeply regret the failings of systems and controls in the period.”
FSC Investment Services managing director Frank Cochran says: “There is a strong chance we will see more fines like this as the FSA is looking at more niche areas such as this to ensure consumers are treated fairly.”