B&B pays £7m for mis-selling

BRADFORD & Bingley has been forced to pay out almost £7m in fines and compensation for the widespread mis-selling of precipice and with-profit bonds that amounted to a massive breach of trust.

The Financial Services Authority said today: that a 'very serious' case of mis-selling was made worse by the fact that Bradford & Bingley ignored official warnings and 'put thousands of its customers at risk of financial loss'.

The FSA fined B&B £650,000 and the firm has agreed to pay £6m in compensation to the customers affected. The FSA said the firm 'did not make suitable recommendations to customers, did not maintain adequate records of sales, and did not have in place adequate systems and controls to prevent and ultimately address these failures'.

The FSA ruling added: 'The mis-sales, which occurred between January 2001 and December 2002, were made more serious because BBG had been warned that there were significant issues with the quality of its customer records on a number of occasions from 1998 onwards. The firm failed to appreciate the significance of those warnings. The failings exposed 6,800 customers to a higher risk of financial loss than they were willing to accept.'

Andrew Procter, the FSA's Director of Enforcement, said: 'During the period in question, B&B was the largest IFA in the UK and its brand had widespread public recognition which raised amongst its customers the expectation that the service it provided to them would be of a high standard. Customers, therefore, went to the firm with the expectation that it would provide a competent and professional financial advisory service.'

'However, advisers sold precipice and with-profits bonds without having in place adequate systems and controls to ensure the products sold were suitable. The FSA has repeatedly stressed to firms . . . the importance of keeping adequate records of sales but B&B failed to do so in these cases.'

Click here to go to the Financial Services Compensation Scheme website

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