A fine of £1.4m has been levied against the ninth largest building society in the UK and the society has agreed to pay its customers £51m after mis-sold investment products collapsed in Keydata Investment Services.
Norwich and Peterborough Building Society (N&P) failed to ensure over 3,000 clients about Keydata products despite their own compliance officers having concerns, said the Financial Services Authority. The FSA said the group did not properly assess the financial positions of many of its customers often times labeling them as being able to withstand more risk than was actually appropriate for the customer.
One such example is how some customers were transferred out of low risk products like a savings account and moved to investments that put their investment at a higher risk. Most of those had already stopped working or were approaching their retirement and were in no position to lose money.
N&P carried out an audit when they realised that 30% of all the investment products sold during the first quarter of 2007 were Keydata products. The Serious Fraud Office is investigating Keydata after they were put into administration in June of 2009. The £51m payout will be used to pay the clients initial investment and interest with any other income or payments received deducted and they will have to sign over their rights to the society.