AXA fined £1.8m for investment advice failingsFCA hands out fine for putting customers at risk
13 September 2013
The Financial Conduct Authority (FCA) has handed out a £1.8 million fine to AXA Wealth Services for 'failing to ensure it gave suitable investment advice to its customers'.
A significant number of customers were put at risk of buying unsuitable products due to the investment advice failings, which were discovered during a review by the FCA.
As well as paying a fine, AXA has agreed a third party will oversee a review of the issues identified.
In 2011, a Which? investigation highlighted that high street banks and building societies were giving poor advice and recommending inappropriate investment products to elderly and potentially vulnerable customers.
Compensation for customers
AXA has agreed to contact all customers who may be affected by its failings and any who suffered a loss as a result will be fully compensated. In addition, those sold inappropriate products will be able to switch or withdraw their investment.
Between September 2010 and April 2012 approximately 37,000 investment products were sold by AXA to 26,000 retail customers. The products were sold by AXA advisors based in branches of Clydesdale Bank, Yorkshire Bank and the West Bromwich Building Society.
These customers, who tended to have low levels of experience in investments and were typically in or nearing retirement, invested £440 million with AXA.
AXA advice had 'serious defects'
The FCA found serious defects in the way AXA advised customers on investments. In particular, AXA 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.
It did not always ensure that customers could manage financially if their investment fell in value, or gather sufficient information from customers before making investment recommendations to them.
It was also criticised for advising customers about how product charges would affect the returns they could expect to receive from their investment, and did not always properly explain to customers why recommended investments were considered to be suitable for them.
FCA: 'AXA's failures were avoidable'
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 warning from the FCA's predecessor to the industry about investment advice.'