The Financial Conduct Authority (FCA) has fined Axa Wealth Services £1.8m for failing to ensure it gave suitable investment advice to its customers.
The FCA said the firm’s failings put a “significant number” of customers at risk of buying unsuitable products.
In addition to the fine, Axa has agreed to contact all customers who may be affected by its failings and a third party will oversee a review of any issues identified as a result of this exercise .
Any customer who suffered loss as a result will be fully compensated and those sold inappropriate products will be able to switch or withdraw their investment, the FCA said.
However, the regulator noted customer losses may be low due to stock market movements in the months since the advice was given.
AXA sold approximately 37,000 investment products to 26,000 retail customers between 15 September 2010 and 30 April 2012. The products were sold through Axa’s tied advisers based in the branches of Clydesdale Bank, Yorkshire Bank and the West Bromwich Building Society.
The customers who bought them tended to have low levels of experience in investments and were typically in or nearing retirement, invested £440m with Axa, the FCA said.
Axa failed to
- 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.
- It also failed to ensure that customers could manage financially if their investment fell in value and gather sufficient information from customers before making investment recommendations to them.
- Furthermore the firm did not always 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.
The FCA said that customers may not currently be feeling the brunt of the failings because of movements in the stock market, however it had decided to act pre-emptively to ensure customers are provided with an opportunity to avoid potential losses during future stock market downturns.
FCA’s director of enforcement and financial crime Tracey McDermott said:
- “Axa fell short of its responsibilities to its customers, many of whom were elderly, retired and financially inexperienced. Its failures resulted in an unacceptable risk of Axa selling products which were unsuitable for its customers. Axa’s failures were avoidable, coming despite repeated warnings from the FCA’s predecessor to the industry about investment advice.
- “The FCA will continue to take tough action against firms who fail to comply with their responsibilities to ensure that consumers get a fair deal.”
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