UK: Insurance group AXA fined £1.8m by FCA over investment advice failures
- Credit: Archant
AXA Wealth Services has been fined £1.8million by the Financial Conduct Authority (FCA) for failing to ensure it gave suitable investment advice to its customers.
The FCA said that the failings had put “a significant number of customers” at risk of buying unsuitable products, with many of the shortcomings only coming to light during a review carried out by the authority.
“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 authority said.
It added that, due to movements in the stock market, the current level of customers losses was likely to be low but it had secured an agreement with AXA that the group would contact customers potentially affected in order to give them an opportuinty avoid potential losses from any future downturn in stock markets.
AXA Wealth Services is part of the UK arm of the French insurance group AXA, which also includes an office in Ipswich.
The failures identified by the FCA relate to the sale between September 15, 2010 and April 30, 2012 of around 37,000 investment products to about 26,000 customers through AXA advisers based branches of Clydesdale Bank, Yorkshire Bank and the West Bromwich Building Society.
The FCA said these customers, who invested a combined total of £440m with AXA, tended to have low levels of experience in investments and were typically in or nearing retirement.
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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.
“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.”
The FCA said AXA had agreed to settle at an early stage of the investigation and had therefore qualified for a 30% discount to its fine. It added that its findings involved no criticism of the Yorkshire and Clydesdale banks or the West Bromwhich Building Society.
AXA announced in April this year that it was ceasing to provide investment advice through branches of the Clydesdale and Yorkshire banks, but the FCA said this was for reasons unconnected with its investigation.
An AXA spokesman said today: “AXA UK has fully cooperated with the FCA and accepts the findings within its report.
“We take regulatory compliance very seriously and regret that the customer advice provided by the bancassurance division between September 2010 and April 2012 did not meet the high standards expected by the FCA.
“As the FCA has noted, customer detriment may currently be low as was the number of complaints AXA has received. We will be writing to our affected retail banking customers and will review the advice provided to them during that period should they wish us to do so.”