Bank of Ireland company fined

A BRITISH subsidiary of the Bank of Ireland has been fined €235,000 for approving and issuing misleading direct offer promotions.

The fine, imposed by Britain's Financial Services Authority, was handed out after a promotional guide was circulated with more than two million copies of national newspapers and was directly mailed to 236,000 prospective customers.

The guide by Chase de Vere financial advisers entitled Your Guide to Investment Recovery promoted four separate products: a British Growth Cocktail Fund, a Corporate Bond Cocktail Fund, an Enhanced Income Plan and an Enhanced Growth Plan.

The FSA said these products were not capital guaranteed and two of the four were complicated stock market-linked investments that involved detailed formula to determine investment return and exposed investors to significant losses of capital in certain circumstances.

It said these two products would have been unfamiliar to the ordinary investors at whom they were targeted. Taken as a whole, significant risk factors were not given due prominence, the FSA said.

The watchdog added that even though Chase de Vere had disputed whether some of the criticisms were justified, it had agreed that it would take all of them into account in its future promotions. Chase de Vere's existing compliance systems were not, however, put into practice properly to prevent the repetition.

Since then, Chase de Vere has contacted the 259 customers who responded to the promotion, notified them of the failings, clarified the misleading impressions given and offered redress. Customers have been given the opportunity to cancel their investment without loss.

"The FSA has made it clear time and time again that financial promotions must not mislead and that significant risk factors should be given due prominence.

"Chase de Vere failed to heed the warnings," FSA enforcement chief Andrew Procter said. Had Chase de Vere not heeded the warnings, the fine would have been much higher.