Society told to pay out for bad advice

The Financial Services Authority said Norwich and Peterborough Building Society failed to ensure the Keydata products were suitable for the 3,200 customers it advised over a three-year period, despite its own compliance team raising concerns.

The watchdog found that the group failed to properly assess the financial circumstances of many of its customers, often designating them as having a higher tolerance of risk than was appropriate.

Some customers were moved out of low-risk products, such as savings accounts, into investments that put their capital and income at risk.

Many of these people were either approaching retirement or had already given up work, and could not afford to lose their money.

In June 2007, N&P carried out a review after it realised that Keydata products formed 30 per cent of all the investment products it had sold during the first three months of the year.

The society’s compliance team produced a report flagging up concerns about the suitability of advice that was being given to customers, but no action was taken and the level of Keydata sales remained high.

Keydata was put into administration in June 2009, and is being investigated by the Serious Fraud Office.