Between August 2005 and June 2009, the Financial Conduct Authority (FCA) said Chase de Vere’s advisers failed to inform customers of the risks surrounding Keydata life settlement products "in a way which was clear, fair and not misleading". The products were sold to 2,806 customers, investing a total of £49.3m.
The fine was issued by the FCA which said from the beginning the firm failed to properly research the products, which required extra controls and restrictions on sales, particularly for customers with a cautious attitude to risk.
The UK finance authority said the firm's lack of research meant the advisers did not understand the risks of investing and were not able to explain the risks to customers, which was made worse by the firm "ceasing to provide standardised wording to advisers to help them describe the risks to customers".
Compensation has been paid by the Financial Services Compensation Scheme to customers who invested up to the scheme limit, which was £48,000 per customer at the time.
However, many of the 139 customers who invested a total of £4.4m over the scheme limit will not recover the total losses of their investment.
"Fully understand"
FCA director of enforcement and financial crime, Tracey McDermott, 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 has agreed to review its sales to any customers who have not already made a claim about Keydata, and has said it will provide compensation where appropriate.
The firm qualified for a 30% discount for agreeing to settle at an early stage of the investigation. The penalty would have been £800,000 without the discount.
