Chase de Vere fined 165,000 over misleading precipice and high income bond promotion

Entitled, 'Your Guide to Investment Recovery' it promoted four separate products: a UK Growth Cocktail Fund, a Corporate Bond Cocktail Fund, an Enhanced Income Plan and an Enhanced Growth Plan. These products were not capital guaranteed. Two of the four were complicated stock market linked investments that involved detailed formulae to determine investment return and exposed investors to significant losses of capital in certain circumstances. These two products would have been unfamiliar to the ordinary investors at whom they were targeted. Taken as a whole, the promotion was not "clear, fair and not misleading" as significant risk factors were not given due prominence.

The promotion's defects were identified by the FSA's Financial Promotion Monitoring Team. It contained defects that had previously been identified and criticised by the team when examining earlier promotions. Even though the firm 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 so as 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. To date, 14 have accepted this offer. The firm has also arranged for the vetting and approval of financial promotions to be dealt with by its parent company's in-house compliance department.

FSA Director of Enforcement, Andrew Procter, said:

"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."

Chase de Vere has been open and co-operative with the FSA during the investigation. Were it not for the co-operation shown and the remedial action taken, the financial penalty would have been much higher.

Notes for editors

1. On 1 June 2003, Chase de Vere Investments plc merged with MX Moneyextra Financial Solutions Limited. The entity created by this merger was named Chase de Vere Financial Solutions plc. References in this press release to "Chase de Vere" are to the entity named Chase De Vere Investments plc prior to 1 June 2003 and to the merged entity named Chase de Vere Financial Solutions from 1 June 2003.

2. The full text of the Final Notice issued by the Regulatory Decisions Committee includes the background to the case, the relevant statutory provisions and regulatory requirements contravened and the factors taken into account by the RDC when setting the level of the fine.

3. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.

4. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.