December 21 2014 Latest news:
Duncan Brodie, business editor
Tuesday, June 17, 2014
A Suffolk-based financial adviser who staged a one-man protest in 2010 over what he claimed was an unfair sales promotion has welcomed a move by the Financial Conduct Authority (FCA) to impose fines totalling more than £3.8million.
The FCA said yesterday it was fining Credit Suisse International (CSI) £2.398m for failing to ensure that promotions for its Cliquet Product were clear and not misleading, with the Yorkshire Building Society (YBS), which acted as distributor for the product, also to be fined £1.429m.
According to the FCA, the product was designed to offer capital protection and a guaranteed minimum return but with the “apparaent potential for significantly more” if the FTSE 100 share index performed consistently well.
The authority concluded, however, that the probability of achieving the maximum return was “close to 0%” despite the figure being used as a key feature of the promotion.
Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “Financial promotions are often the primary source of information for consumers and in this case CSI and YBS let their customers down badly. These promotions were a serious breach of the requirement to be clear, fair and not misleading.”
The FCA said that both firms had agreed to settle an an early stage of its investigation and had therefore received a 30% discount on their fines.
News of the fines was welcomed by Peter Herd of Ipswich-based Essential IFA, who staged a demonstration outside the Ipswich branch of the Chelsea Building Society (part of YBS) in November 2010 when the investment scheme in question was being promoted.
“I am very glad that the FCA has taken this matter seriously,” he said. “However, it is no longer just about banks and building societies; there are now online providers offering products without authorisation.
“People need to make sure they seek independent advice and to make sure the organisation or individual is authorised to conduct business and give advice.”
A spokesman for the Yorkshire Building Society Group said yesterday that it fully accepted the FCA decision and apologised to its customers. “We have agreed with the FCA a process under which our affected customers will be given the option to exit their account and receive an appropriate rate of interest, or to retain their account until maturity.
“We will be communicating further information to affected customers (including those who have closed their account), over the coming weeks,” he added.
Credit Suisse also said that it accepted the FCA’s findings, adding: “We have taken this matter very seriously, have fully co-operated with the FCA’s investigation and have agreed a comprehensive redress process.”