Barclays fined £7.7 million for mis-selling
The Financial Services Authority has fined Barclays Bank £7.7 million for investment advice failures around the sale of two Aviva funds.
Barclays sold Aviva's Global Balanced Income Fund and Global Cautious Income Fund to 12,331 people between July 2006 and November 2008, creating investments worth around £692 million, but there were 'serious failings' in the way they were sold, the watchdog found.
In addition to the fine, the bank has already paid around £17 million in compensation and the FSA estimates another £42 million could be paid to customers.
The bank was fined because it failed to ensure the two funds were suitable for its customers and did not train its staff adequately to explain the associated risks when selling the funds. Customers were also not given the correct information or documentation outlining the risks involved and when issues did arise there was a failure in responding promptly.
Out of the 12,331 people invested in the two funds, 1,730 complained about the advice they were initially given, equating to one in seven investors.
To compound matters, Barclays identified the funds as being potentially unsuitable in early June 2008, but did not take subsequent, timely action.
During the FSA investigation Barclays continued to carry out a past business review to evaluate the suitability of the sales of both funds: 3,099 sales of the Cautious Fund (51% of all sold) and 3,378 of the Balanced Fund (74% of all sold) have been identified as requiring further consideration.
Paul McNamara, managing director of insurance and investments at Barclays, says; "We know on this occasion we let our customers down and did not do all that we could have done to meet the high standards our customers expect from us and for this we are sorry.
"We stopped selling these investment products two years ago and, since discovering the issue, we have been working hard to ensure this does not happen again."
Margaret Cole, the FSA's managing director of enforcement and financial crime, says the FSA has robust procedures in place to ensure advice given is suitable and firms should take account of a customer's financial circumstances and attitude to risk before selling them an investment product.
Barclays are "fully deserving" of this fine because "on this occasion they failed to adhere to the FSA's rules and thousands of investors, many of whom were seeking to invest their retirement savings, have suffered," she adds.
Anyone who invested in the Global Balanced Income Fund and Global Cautious Income Fund and has a question relating to advice they received in connection with the investment should contact Barclays: 0800 587 7495.
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.