LONDON, Jan 18, 2011 – Britain\’s financial watchdog said Tuesday it had fined Barclays bank £7.7 million and ordered it to compensate customers up to £60 million after they received inadequate advice on investing in funds.
"The Financial Services Authority has fined Barclays Bank plc £7.7 million (9.2 million euros, $12.3 million) for failures in relation to the sale of two funds," it said in a statement.
The FSA added that it had secured "as much as £60 million" in compensation for customers.
Barclays apologised and said it was determined to "put things right."
The FSA identified "a number of serious failings in the way" that Aviva\’s Global Balanced Income Fund and Global Cautious Income Fund were sold to 12,331 mostly retired or nearly-retired clients between July 2006 and November 2008.
These included "failing to ensure that training given to sales staff adequately explained the risks associated with the funds."
Additionally, Barclays failed "to ensure product brochures and other documents given to customers clearly explained the risks involved and could not mislead customers."
A total of £692 million was invested in the funds over the 29-month period.
"Thousands of investors, many of whom were seeking to invest their retirement savings, have suffered," said Margaret Cole, the FSA\’s managing director of enforcement and financial crime.
"To compound matters, Barclays failed to take effective action when it detected the failings at an early stage.
"Because of this, and given Barclays\’ position as one of the UK\’s major retail banks, we view these breaches as particularly serious and fully deserving of what is a very substantial fine," she added in the FSA statement.
In a separate statement, Paul McNamara, managing director of insurance and investments at Barclays, apologised to the bank\’s customers.
"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."
The FSA last week fined state-rescued Royal Bank of Scotland and one of its units a total of £2.8 million for failing to adequately handle customer complaints.