The UK’s finance watchdog has bitten a chunk out of the Yorkshire Building Society and Credit Suisse after both were found to have run “pie in the sky” marketing for an investment product.
Credit Suisse has been forced to cough up a £2.4m fine, and Yorkshire Building Society has been told to pay around £1.5m after promoting the potential maximum return, which – the Financial Conduct Authority (FCA) ruled – investors had virtually no chance of getting.
Credit Suisse designed the product, called “Cliquet”, to provide a minimum return, with the apparent potential for getting back significantly more if the FTSE 100 performed consistently well.
However, the FCA said that the probability of getting back a minimum return was between 40% and 50%, while the chance of a maximum return was “close to 0%”.
The product was sold to 83,777 people, who had a total of £797m invested, but typically promoted to people with limited investment experience, the FCA said.
“These promotions were a serious breach of the requirement to be clear, fair and not misleading,” said Tracey McDermott, FCA’s director of enforcement and financial crime. “Credit Suisse and Yorkshire Building Society knew that the chances of receiving the maximum return were close to zero but they nevertheless highlighted this as a key promotional feature of the product. This was unacceptable.”
Both companies accepted the fines and apologised to customers. A Yorkshire Building Society spokesman said: “On this occasion we have fallen short of our own high standards, and of putting our customers at the heart of everything we do. We have agreed with the FCA a process under which our affected customers will be given the option to exit their account and receive an appropriate rate of interest, or to retain their account until maturity.”
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