Huge fine for Barclay’s over investments

High Street banking giant Barclay’s Bank has been fined a fortune by the financial services regulator, the Financial Services Authority. The bank has been ordered to repay customers around £60 million, and has been fined £7.7 million on top of this, resulting in total fines of nearly £70 million.

The fines have been imposed as a result of investments that were mis-sold by the bank. The FSA carried out an investigation that revealed ‘serious failings’ in the way in which the bank had sold the two investments, which were Aviva’s Global Balanced Income fund and Global Cautious Income fund. The two funds were sold between July 2006 and November 2008, and the total value of the investments came to nearly £700 million.

According to the FSA the investments were mis-sold because the bank did not take into account a number of crucial factors when selling the funds. The regulator said that the funds were sold to over twelve thousand customers in total, but that the FSA did not consider important factors such as the financial circumstances of the customers, their investment knowledge and experience, or their investment objectives.

An official from the FSA said: “The FSA requires firms to have robust procedures in place to ensure any advice given to customers is suitable. Therefore, when recommending investment products, firms should take account of a customer’s financial circumstances, their attitude to risk and what they hope to achieve by investing. On this occasion however, Barclays failed to do this and thousands of investors, many of whom were seeking to invest their retirement savings, have suffered. To compound matters, Barclays failed to take effective action when it detected the failings at an early stage. “

She added: “Because of this, and given Barclays’ position as one of the UK’s major retail banks, we view these breaches as particularly serious and fully deserving of what is a very substantial fine.”

Tags: High Street, advice, financial services regulator, uk, substantial fine, important factors, funds, compound matters