Barclays fined with over $12 million for failures in sale of two funds

[News_Editor]

Barclays fined with over $12 million for failures in sale of two funds

2011-01-19 13:22:11 GMT+7 (ICT)

LONDON (BNO NEWS) -- Barclays Bank on Tuesday was fined with over $12 million for failures in relation to the sale of two funds, the highest fine imposed for retail failings.

The Financial Services Authority (FSA) decided to fine Barclays with £7.7 million ($12.28 million) and will contact customers in order to pay them redress if appropriate. It is expected that as much as £60 million ($95.71 million) will be paid in redress.

Barclays sold Aviva's Global Balanced Income Fund and Global Cautious Income Fund to 12,331 people with investments totaling £692 million ($1.1 billion) between July 2006 and November 2008.

The FSA said that there were a number of failures in the way the funds were sold including ensuring that the funds were suitable for customers and failing to explain the risks associated with the purchase due to poor staff training.

Other failings were the lack of product brochures and other documents for customers in order to explain the purchase and avoid misleading, and not having appropriate procedures for monitoring sales and responding to customers' claims.

"We know that on this occasion we let our customers down and did not do all we could have done to meet the high standards that our customers expect from us and for this we are sorry," said Paul McNamara, Barclays' Managing Director of Insurance and Investments.

McNamara added that Barclays has openly cooperated with the FSA investigation since the beginning. The investigation revealed that the financial institution did not take appropriate and timely action despite identified the failings.

One in seven investors complained about the advice they were given to invest in the funds. Overall, Barclays noticed that 3,099 sales of the Cautious Fund (51% of all sold) and 3,378 of the Balanced Fund (74% of all sold) needed further consideration.

"Barclays failed to take effective action when it detected the failings at an early stage," said Margaret Cole, FSA managing director of enforcement and financial crime. "We view these breaches as particularly serious and fully deserving of what is a very substantial fine."

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