Barclays and the £7.7m FSA fine for investment failings
Barclays has been fined a record £7.7m by the Financial Services Authority (FSA) for investment advice failings and ordered to compensate customers with a further £60m.
The fine relates to the sale of two investment funds – Aviva’s Global Balanced Income fund and Global Cautious Income. It is the largest fine ever imposed by the FSA for retail advice failings.
Barclays sold these funds to a total of 12,331 customers between July 2006 and November 2008, investing a total of £692m in these two funds.
The FSA identified a number of serious failings in the way in which these two funds were sold to customers. These failures included not ensuring the funds were suitable for customers in view of their investment objectives, circumstances and knowledge.
Barclays also failed to make sure that the staff were trained to understand the risks associated with these funds.
Although Barclays became aware of their shortcomings in respect of the sale of these two investment funds as early as June 2008, they did not take appropriate and timely action to rectify their advice process failures.
1,730 of the 12,000 customers subsequently complained about the advice they received to invest in these funds. Anyone who was advised by Barclays to invest in these funds should call the bank on 0800 587 7495 to register their complaint.
Whilst Barclays have apologised today, saying they “know that on this occasion we let our customers down”, this is the sort of behaviour we have come to expect from banks when it comes to the sale of investments.
The approach of the banks when it comes to the sale of investment products is always sales rather than advice-driven. You only have to spend a few minutes in a queue at your local bank to gain first hand experience of the sorts of pressurised sales tactics they frequently deploy.
Hopefully this record FSA fine will make more consumers aware that they should never seek investment or financial planning advice from their banks. These organisations are the worst placed entities to provide this type of service, based on their sales culture along with the typically poor level of qualifications and experience of their advisers.
To ensure suitability for their needs, investors should always seek professional independent financial advice from a firm that has properly qualified and experienced advisers, a transparent remuneration structure and a robust investment advice process. Banks simply cannot offer this.
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