The FSA said that BOS received 2,592 complaints between 30 July 2007 and 31 October 2009 over the sales of its Collective Investment Plan, Personal Investment Plan, Guaranteed Growth Bond, ISA Investor and Guaranteed Investment Plan, and wrongly rejected “a significant number” of these complaints.
Many of the complaints were from older customers who had “little or no experience of investment products”, according to the regulator.
BOS is now conducting a review of advice-related complaints received between 1 February 2004 and 31 December 2009, as well as a targeted review of its sales of investment products between 30 July 2007 to 1 March 2010 to around 8,000 customers it classified as having a cautious attitude to investment risk.
The investigation also found that complaints were not investigated properly, and not assessed competently or fairly. The FSA said “poor decisions” were made regarding the suitability of investments for customers who complained.
It added that BOS did not carry out “timely and effective analysis” of the root causes of the complaints it received.
The FSA says BOS was alerted to concerns at an early stage as the Ombudsman was overturning around 46% of BOS’s decisions to reject complaints.
An internal review by BOS based on a sample of rejected complaints found that as many as 45% of handled complaints should have been upheld rather than rejected.
BOS has paid £2.4m in compensation to customers whose complaints were upheld in its internal review; further compensation of around £15m is expected to be paid once further reviews have been completed.
“This fine reflects BOS’s serious failure to treat vulnerable customers fairly. The firm’s failure to ensure it had a robust complaint handling process in place led to a significant number of complaints being rejected when they should have been upheld,” said Tracey McDermott, acting director of enforcement and financial crime at the FSA.