FSA Fines N&P And Agrees Payments For Customers In Relation To Keydata Products
Published: 18 April 2011 By MoneyHighStreet Staff Leave a Comment
Norwich & Peterborough Building Society (N&P) has been fined £1.4 million by the Financial Services Authority (FSA) for failing to give its customers suitable advice in relation to the sale of Keydata products.
N&P will make available approximately £51 million in ex gratia payments to all customers, ensuring they don’t lose out because of their investment.
Over 3 years N&P advised 3,200 clients to invest in Keydata’s life settlement products but failed to properly assess the financial circumstances of many of its customers, designating them as having a higher tolerance of risk than was appropriate. The result was unsuitable sales.
With many of these customers approaching or already in retirement, they could not afford to lose their money.
Despite their compliance team producing a report in June 2007 setting out concerns about the suitability of advice given to customers no effective action was taken by N&P and Keydata sales remained consistently high.
Tracey McDermott, FSA acting director, enforcement and financial crime, said “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 has co-operated with the FSA’s investigation and at an early stage agreed to settle.