Financial Supervisory Authority issues public warnings to and imposes penalty payments on four companies
An inspection of investment advice conducted by the Financial Supervisory Authority (FIN-FSA) identified several cases of non-compliance with the companies’ obligation to obtain adequate information on the customer and to ensure the suitability of transactions for the customer prior to offering relevant investment advice. In addition, the companies had failed to record the fulfilment of the obligation to obtain information in documents in such a way that the information would have enabled ex post verification of the course of events. This has led to the companies jeopardising the functioning and effectiveness of the FIN-FSA’s supervision. Moreover, in its investment advice, one of the companies had failed to take adequate action for identification and prevention of conflicts of interest.
The FIN-FSA has imposed the following administrative sanctions:
- Nordea Bank AB (publ), Finnish Branch – a penalty payment of EUR 1,000,000 and a public warning
- Helsinki Area Cooperative Bank – a penalty payment of EUR 400,000 and a public warning
- Alexandria Pankkiiriliike Oyj – a penalty payment of EUR 90,000 and a public warning
- Investium Ltd – a penalty payment of EUR 20,000 and a public warning.
The FIN-FSA conducted an inspection at the companies in 2015–2016 regarding the obligation to obtain information in connection with investment advice provided by them. The inspection focused on examining how investment fund products and structured financial instruments had been sold to non-professional customers aged over 70. The inspection identified several cases of non-compliance with the provisions of the Investment Services Act and the regulations issued by the FIN-FSA.
The public warnings were issued for non-compliance with the obligation to obtain information and non-compliance with the suitability assessments. The penalty payments, in turn, were imposed for omissions regarding documentation requirements and for failure to identify and prevent conflicts of interest.
The most significant shortcomings at Nordea Bank AB (publ), Finnish Branch, were related to obtaining information on customers’ investment objectives, as well as investment experience and knowledge. Shortcomings were also detected in the documentation of information obtained from customers and in the documentation of the suitability assessments. Moreover, in its investment advice, Nordea had failed to identity and prevent conflicts of interest.
The most significant shortcomings at Helsinki Area Cooperative Bank were related to obtaining information on customers’ investment objectives, as well as investment experience and knowledge. The shortcomings were in part systematic. In addition, there were shortcomings in the documentation of information obtained from customers and in the documentation of the suitability assessments and investment advice.
The most significant shortcomings at Alexandria Pankkiiriliike Oyj were related to obtaining information on matters regarding customers’ investment objectives, such as the purpose of the investment, as well as risk appetite and risk profile. The shortcomings were in part systematic. In addition, there were shortcomings in the documentation of information obtained from customers and in the documentation of the suitability assessments and investment advice.
The most significant shortcomings at Investium Ltd were related to obtaining information on matters regarding customers’ investment objectives. Shortcomings were also detected in the documentation of information obtained from customers and in the documentation of the suitability assessments.
Determination of the size of a penalty payment is based on a comprehensive assessment, taking into account, among other things, the nature, extent and duration of the act and the financial position of the actor. The FIN-FSA imposes a penalty payment not exceeding EUR 1 million. The penalty payment is payable to the State.
The decisions of the FIN-FSA are not yet legally binding. The companies have the right to appeal the decisions of 6 March 2017 to the Market Court within 30 days of receipt of notice of said decisions.
To request an interview with
- Sonja Lohse, Head of Director General’s Staff, Chief Adviser, please contact FIN-FSA Communications, tel. +358 50 385 5154 (weekdays 9.00–16.00).
Appendices
- Decisions by the Financial Supervisory Authority