The UK’s financial regulator, the Financial Services Authority, has fined AWD Chase de Vere Wealth Management £1.12 million ($1.87 million) for serious failings in its pension transfer, pension annuity and income withdrawal business that led to mis-selling.

AWD Chase de Vere WM mis-sold some pension transfers and pension annuities by recommending products to customers who already had adequate existing pension provisions or whose attitude to risk did not match the products recommended to them, the FSA said in a statement.

UK regulatory authorities have tightened their scrutiny of investment products following a number of mis-selling scandals involving sectors such as private pensions and mortgages in recent years.

"We very much regret the regulatory lapses which occurred in the past and our new management team has worked very closely with the FSA to correct matters. We regard any lapse in our standards as unacceptable, however fewer than one per cent of our clients have been affected and we are in the process of identifying all the cases and taking steps to address and compensate clients for any potential loss. I would like to apologise to all our clients who have been affected," Mike Kirsch, chief executive, AWD Group, said in a statement yesterday.

"The FSA has acknowledged the strong, effective action taken by the company to address the issue. We have treated the resolution of this issue and the introduction of effective management controls as our number one priority. We have restructured our senior management and sales management and completely overhauled our compliance and advisory processes to ensure that our standards are now among the best in the industry," he said.

AWD Chase de Vere WM has estimated that as many as 800 of its customers may have received unsuitable advice in relation to 1,200 sales between February 2006 and October 2007, the FSA said.

The FSA also found that the firm sometimes failed to properly disclose the risks and costs of the products it recommended, and was also unable to demonstrate the suitability of its advice from its own records in 39 per cent of the transactions which were reviewed.  Based on a sample of recommendations, the FSA found that 28 per cent of transactions resulted in mis-sales. 

“This fine…reflects that AWD Chase de Vere failed to establish its customers’ needs and did not provide them with complete and accurate information, which resulted in a large number of mis-sales,” said Margaret Cole, FSA director of enforcement.

The FSA said it recognised that the firm has reviewed past business so as to compensate customers where appropriate, and provided significant co-operation with the conduct of the investigation.  Without this remediation, the FSA would have imposed a significantly higher penalty.