Building society gets fined £1.4m by watchdog
The UK's ninth largest building society has been fined £1.4m and has agreed to pay £51m to its customers after it mis-sold investment products in collapsed firm Keydata Investment Services.
The Financial Services Authority said Norwich and Peterborough Building Society failed to ensure the Keydata products were suitable for the 3,200 customers it advised over a three-year period, despite its own compliance team raising concerns.
The watchdog found that the group failed to properly assess the financial circumstances of many of its customers, often designating them as having a higher tolerance of risk than appropriate.
Some customers were moved out of low-risk products into investments that put capital and income at risk. Many were either approaching retirement or had given up work, and could not afford to lose their money.
In June 2007, N&P carried out a review after it realised that Keydata products formed 30% of all investment products it had sold during the first three months of the year.
The society's compliance team produced a report flagging up concerns about the suitability of advice that was being given to customers, but no action was taken and the level of Keydata sales remained high.
Keydata was put into administration in June 2009, and is being investigated by the Serious Fraud Office. N&P has agreed to make £51m in ex-gratia payments to customers who bought a Keydata policy after receiving advice.