AXA has been fined £1.8m after the Financial Conduct Authority found it sold risky products to customers and failed to provide them with suitable advice
Between September 2010 and April 2012, the firm sold around 37,000 investment products to 26,000 customers, who invested a total of £440m with the firm. Many of these people were retired or nearing retirement and financially inexperienced, the FCA said.
The regulator highlighted 'serious defects' in the way the products were sold. These included: failure to confirm how much risk customers were prepared to take; neglecting to ensure customers could manage financially should their investments fall in value; and not advising customers how product charges would affect their returns.
A lack of effective controls on bonuses also meant there was an 'unacceptable risk' of sales advisers promoting inappropriate investments to customers in order to qualify for bonuses, the FCA said.
Tracey McDermott, the FCA's director of enforcement and financial crime, said: 'AXA fell short of its responsibilities to its customers.
'AXA's failures were avoidable, coming despite repeated warnings from the FCA's predecessor to the industry about investment advice.'
AXA said it accepted the watchdog's findings and would cooperate fully with the FCA's instruction to compensate customers. The firm added that it took regulatory compliance very seriously.
'We will be writing to our affected retail banking customers and will review the advice provided to them during that period should they wish us to do so,' an AXA spokesman said.
A third party will oversee a review of any issues identified as a result of this exercise.
The products were sold through AXA advisers based in retail branches of Clydesdale Bank, Yorkshire Bank and the West Bromwich Building Society.