The Financial Conduct Authority has fined Chase de Vere Independent Financial Advisers Limited £560,000 for failures surrounding the sale of Keydata products.
In a final notice, published today (17 November), the regulator said it has hit the IFA with a fine because it found Chase de Vere did not research the Keydata products well enough to understand the risks they posed to customers and did not ensure that its advisers understood those risks.
As a result, the FCA stated the advisers did not explain the risks of investing in Keydata products properly to customers, and the firm made this worse by ceasing to provide standardised wording to advisers to help them describe the risks to customers.
Between 2005 and 2009 Chase de Vere’s advisers sold Keydata products to 2,806 customers who invested £49.3m.
The Financial Services Compensation Scheme has paid compensation to Chase de Vere’s eligible customers up to the scheme limit, which was £48,000 per customer at the time. The FCA stated 139 customers invested a total of £4.4m over the scheme limit and these customers may not recover full losses.
Tracey McDermott, director of enforcement and financial crime at the FCA, said: “Firms need to ensure that they fully understand and explain to customers the risks of investing in the products they are offering.
“That includes researching the products thoroughly before they decide to offer them and ensuring advisers have the tools they need to explain the risks to customers.
“Chase de Vere failed to do this, leaving its customers without a full understanding of the risks they were taking by investing their money in Keydata products.”
The firm has agreed to review its sales to any customers who have not already made a claim to Chase de Vere or the Financial Services Compensation Scheme about Keydata, and to provide redress where appropriate.
Chase de Vere agreed to settle at an early stage of the investigation and therefore qualified for a 30 per cent discount. Without the discount the financial penalty would have been £800,000.
Earlier this month, the FSCS confirmed will get its day in court over adviser sales of Keydata bonds, after a settlement with Chase de Vere, the last of an original list of six lead defendents, had put a trial in doubt.
In a statement to FTAdviser the scheme confirmed there are 63 defendant firms in total, of which 15 will be used as lead cases. An FSCS spokesperson added that “a shared cost order has been granted relating to all of them”.
