Chase de Vere has been hit with a £560,000 FCA fine for failures surrounding the sale of Keydata products.
Between August 2005 and June 2009, Chase de Vere’s advisers sold Keydata life settlement products to 2,806 customers who invested a total of £49.3m.
The Financial Services Compensation Scheme has paid compensation to eligible customers up to the scheme limit, which was £48,000 per customer at the time. However, the regulator says 139 customers invested a total of £4.4m over the scheme limit and the majority of these people may not recover the full losses arising from their investment.
The FCA says Chase de Vere did not research the Keydata products well enough to understand the risks they posed to customers and did not ensure that its advisers understood those risks.
As a result, the advisers did not explain the risks of investing in Keydata products properly to customers, and the firm made this worse by ceasing to provide standardised wording to advisers to help them describe the risks to customers.
As a result, Chase de Vere failed to disclose to its customers certain distinctive features and risks of the Keydata products in a way which was clear, fair and not misleading.
FCA director of enforcement and financial crime Tracey McDermott says: “Firms need to ensure that they fully understand and explain to customers the risks of investing in the products they are offering. That includes researching the products thoroughly before they decide to offer them and ensuring advisers have the tools they need to explain the risks to customers.
“Chase de Vere failed to do this, leaving its customers without a full understanding of the risks they were taking by investing their money in Keydata products.”
Chase de Vere chief executive Stephen Kavanagh says: “We are very disappointed to have been fined. However, it is important to put this into context.
“The shortcomings identified were addressed and rectified some years ago. The FCA itself has, in its final notice document issued today, identified the improvements in our business quality monitoring, sales practices, systems and controls, product research, management information, compliance monitoring and complaints handling.
“The Chase de Vere business of today is one with robust systems and controls, where highly qualified and professional advisers deliver good quality independent financial advice and service to our clients.”