The Financial Supervisory Authority (FIN-FSA) has fined Nordea Bank AB (publ), Finnish Branch, Helsinki Area Cooperative Bank, Alexandria Pankkiiriliike Oyj, and Investium Ltd a combined €1.5m after an inspection of investment advice 'identified several cases of non-compliance with the companies' obligation to obtain adequate information on the customer and to ensure the suitability of transactions for the customer prior to offering relevant investment advice'.

In addition, the companies also failed to record the fulfilment of the obligation to obtain information in documents in such a way that the information would have enabled post verification of the course of events. 'This has led to the companies jeopardising the functioning and effectiveness of the FIN-FSA's supervision,' stated the regulator. 'Moreover, in its investment advice, one of the companies had failed to take adequate action for identification and prevention of conflicts of interest'.

The regulator has imposed fines to Nordea Bank AB (publ), Finnish Branch (€1m); Helsinki Area Cooperative Bank €400,000; Alexandria Pankkiiriliike Oyj €90,000; and Investium Ltd €20,000. All four firms received a public warning.

The decision comes after the FIN-FSA conducted an inspection of the companies in 2015-2016 to obtain information in connection with investment advice processes. The inspection focused on examining how investment fund products and structured financial instruments were sold to non-professional customers aged over 70. The inspection identified several cases of non-compliance with the provisions of the Investment Services Act and the regulations issued by the FIN-FSA.

According to the regulator, the public warnings refer to non-compliance with the obligation to obtain information and non-compliance with the suitability assessments; while the penalty payments, in turn, were imposed for omissions regarding documentation requirements and for failure to identify and prevent conflicts of interest.

The four firms failed to obtain information on customers' investment objectives such as the purpose of the investment, risk appetite and risk profile, as well as their investment experience and knowledge. Shortcomings were also detected in the documentation of information obtained from customers and in the documentation of the suitability assessments and investment advice. According to the regulator, Nordea also failed to identity and prevent conflicts of interest in its investment advice.

The size of a penalty payment is based 'on a comprehensive assessment, taking into account, among other things, the nature, extent and duration of the act and the financial position of the actor', according to the regulator. The decisions of the FIN-FSA are not yet legally binding, and the firms have the right to appeal the decisions within 30 days of receipt of notice.

According to SRP data, Alexandria Pankkiiriliike Oyj was the most active provider of structured products in 2016 in Finland with over 49 products and €136m in sales. Nordea was also a top 5 provider in 2016 with 31 products and €102m in sales.

Click in the links to read the FIN-FSA decision on each individual firm:

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