The Financial Supervisory Authority of Finland (Fiva) has issued public warnings and penalty payments to four financial institutions for failings in their investment advice practices.
Fiva reveals in a press release that an inquiry it conducted in 2015–2016 found that the financial institutions have widely neglected their obligation to obtain adequate information and ensure the suitability of their financial instruments before offering investment advice to elderly customers.
The inquiry was conducted to determine how financial institutions offer shares in investment funds and structured finance instruments to over 70-year-old customers.
“The inquiry detected several infringements of the financial services act and the decrees issued by the Financial Supervisory Authority,” states Fiva.
The four financial institutions – Nordea Finland, OP Helsinki, Alexandria and Investium – were also found to have neglected their responsibility to document customer information, thus preventing the financial watchdog from performing its statutory duties. Nordea was additionally found to have failed to identify and prevent conflict of interest, according to the press release.
Nordea was consequently issued a fine of 1,000,000 euros, OP Helsinki a fine of 400,000 euros, Alexandria a fine of 90,000 euros and Investium a fine of 20,000 euros. The financial institutions have a 30-day window to appeal the punitive decision.
Fiva opened its inquiry into the investment advice practices of financial institutions after Helsingin Sanomat reported in June 2015 that Nordea had instructed a 90-year-old customer to divest its two-million-euro stock portfolio and invest the proceeds in financial instruments that generated notable profits for the financial institution.
Aleksi Teivainen – HT
Photo: Heikki Saukkomaa – Lehtikuva