Barclays fined £7.7m for mis-selling funds

18 January 2011

Barclays has been fined £7.7 million for failures related to the sale of investment funds to more than 12,000 investors.

The bank did not ensure that Aviva’s Global Balanced Income Fund (the Balanced Fund) and Global Cautious Income Fund were suitable for clients when selling the products between 2006 and 2008, the Financial Services Authority (FSA) explained.

Barclays sold the funds to 12,331 investors, most of whom were retiring or nearing retirement age - with a total investment value of £692 million.

The regulator’s investigation found that one in seven has complained to the bank about the investment advice it provided, meaning Barclays has paid out £17 million in compensation.

However, the FSA estimated that a total of £42 million could potentially be paid to investors who received poor advice.

Margaret Cole, the FSA’s managing director of enforcement and financial crime, said: “The FSA requires firms to have robust procedures in place to ensure any advice given to customers is suitable.

“Therefore, when recommending investment products, firms should take account of a customer’s financial circumstances, their attitude to risk and what they hope to achieve by investing.”

The £7.7 million fine is the highest given out to a bank for failings in its retail operations.

By Jim Ottewill

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