AXA Wealth has been fined £1.8m by the Financial Conduct Authority (FCA) for failing to ensure it gave suitable investment advice to its customers.
Naughty AXA Wealth.
The failures relate to ‘advice’ given by AXA Wealth ‘advisers’ working in branches of Clydesdale Bank, Yorkshire Bank and the West Bromwich Building Society.
They sold £440m of AXA investment products to these bank and building society customers between 15th September 2010 and 30th April 2012. This was made up of 37,000 investment products sold to 26,000 retail customers.
That’s a lot of unsuitable investment advice.
AXA Wealth receive this rap across the knuckles for failing to do a number of things.
According to the FCA, they did not always confirm how much risk its customers were prepared to take with their investments and explain in clear terms the level of risk they would be taking.
They also did not always ensure that customers could manage financially if their investment fell in value, something we refer to as capacity for risk.
AXA Wealth ‘advisers’ also failed to gather sufficient information from customers before making investment recommendations to them, advise customers about how product charges would affect the returns they could expect to receive from their investment or properly explain to customers why recommended investments were considered to be suitable for them.
This is all pretty basic stuff.
When we read about FCA fines like this for unsuitable investment advice, we tend to bang our heads against our desks because any financial adviser worth his or her salt should be covering this stuff as a matter of course.
The trouble is, the people you see working in banks are not their to give you investment advice; they are there to sell you (and as many other customers as possible) products.
We have been warning investors about this for years.
Despite tied salespeople in banks carrying fancy titles suggesting they are ‘advisers’ or ‘planners’ they are simply salespeople, out to convince you to buy a product.
They are still supposed to do this in a way that ensures suitability, but once again with this FCA fine and final notice we see an example of how it is not happening as intended.
If you ever find yourself tempted to buy an investment or other financial product in a bank, stop, walk away and find yourself a decent independent financial adviser.
Consider the failures described in this blog and make sure that any financial adviser you work with covers the basics; how much risk you are willing to take, how much risk you are able to take and how much risk you need to take.
