UK regulatory body the Financial Conduct Authority (FCA) has charged Credit Suisse International (CSI) and Yorkshire Building Society (YBS) for misleading financial promotions for CSI’s Cliquet Product.
CSI and YBS have been slammed with penalties of £2,398,100 and £1,429,000, respectively.
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Although the companies have marketed potential maximum return on the product, it was found that the chances of achieving maximum returns were close to 0%, FCA said. The probability of minimum return was 40-50%.
FCA’s director of enforcement and financial crime Tracey McDermott said it was crucial that firms consider the needs of their customers from the time that products are being designed through to their marketing and sale.
"Financial promotions are often the primary source of information for consumers and in this case CSI and YBS let their customers down badly. These promotions were a serious breach of the requirement to be clear, fair and not misleading," added McDermott.
"CSI and YBS knew that the chances of receiving the maximum return were close to zero but they nevertheless highlighted this as a key promotional feature of the product. This was unacceptable."
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By GlobalDataA total of 83,777 clients invested an overall amount of £797,380,716 in the product with YBS being the distributor responsible for approximately 75% of the total amount invested, the watchdog advised.
The FCA further revealed that CSI has failed to undertake a complete review process for its promotions on a periodic basis, which could have highlighted the problems in the product brochure earlier.
CSI and YBS have settled the case at the early stage and received a 30% discount.
