The market watchdog claimed that AXA sold nearly 37,000 investment products to retail customers through AXA’s advisers based in the branches of Clydesdale Bank, Yorkshire Bank and the West Bromwich Building Society, between 15 September 2010 and 30 April 2012.
A majority of the customers, who invested a mammoth £440m with AXA, were inexperienced in investments and the AXA’s failings threw them at a risk of buying unsuitable products, claims the regulator.
Without assessing their capacity to take risk and absorb losses, AXA allowed investors to put their capital into stocks and shares, open-ended investment companies and investment bonds, which are considered more fragile investment paths.
FCA enforcement and financial crime director Tracey McDermott said that AXA fell short of its responsibilities to its customers, many of whom were elderly, retired and financially inexperienced.
"Its failures resulted in an unacceptable risk of AXA selling products which were unsuitable for its customers," McDermott added.
"AXA’s failures were avoidable, coming despite repeated warnings from the FCA’s predecessor to the industry about investment advice."
Besides paying the penalty, AXA has agreed to contact all customers who may be affected by its failings and a third party will oversee a review of any issues identified as a result of this exercise.
The customers who have suffered losses as a result of wrong advicewill be fully compensated, and those sold, inappropriate products will be able to switch or withdraw their investment.
The UK-based wealth management company agreed to settle the case at an early stage of the investigation, and thereby availed a 30% discount.
