Investment manager Axa Wealth Services has been fined £1.8 million by the City watchdog for failing to make sure that vulnerable customers received proper advice.
The Financial Conduct Authority (FCA) said Axa’s shortcomings put thousands of customers, many of whom were elderly, retired and “financial inexperienced”, at risk of buying unsuitable investment products.
Axa sold about 37,000 policies, worth £440 million, to 26,000 customers in branches of the Clydesdale and Yorkshire banks, as well as West Bromwich Building Society, between September 2010 and April 2012.
However, the FCA said the firm’s advisers did not always explain the risks of investing or check that customers, who tended to be retired or approaching retirement, would be able to cope financially if the value of their investments fell.
The regulator also said there was an “unacceptable risk” of advisers making inappropriate investment recommendations to qualify for bonus payments.
Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “Axa fell short of its responsibilities to its customers, many of whom were elderly, retired and financially inexperienced.”
Axa pledged to write to affected customers with an offer to review the advice they were given, and said it had co-operated with the regulator’s investigation. The FCA stressed that Clydesdale, Yorkshire and West Bromwich were not at fault.
Today’s penalty came just two weeks after Aberdeen Asset Management was fined £7.2m following a mix-up over client money. The company admitted it had failed to segregate clients’ funds from its own between September 2008 and August 2011, leading to the departure of at least two members of staff.