The highest fine ever, for retail filings was charged to against Barclay’s by the Financial Services Authority (FSA). The £7.7m fine was for investment advice failures with regard to the sale of two high risk funds. The victims will receive from the firm, payout totaling up to £60m in compensation. The two high risk funds were sold to 12, 331 clients between July 2006 and November 2008 with the funds losing their value at a later date.
The investments original amount was over £690m. Barclay’s did not have brochures that explained the risks, did not train their sufficiently train staff to explain the risks with the funds and they failed to do due diligence on the suitability of the funds for customers. Appropriate on time action was not taken when Barclays’s became aware of the possibility of mis-selling in June of 2008, says the FSA.
Over 14% of investors filed complaints about the advice they received about the funds. The FSA’s findings concluded that over 50% of Cautious Income Fund sales and over 70% of Balanced Income Fund sales lacked sufficient consideration.
Over £17m has been paid in compensation and the FSA is estimating that over £42m more could be paid. Victims include many people nearing their retirement years or already retired.