Translation from original text in Danish. In case of discrepancies, the Danish version prevails.
Danske Bank has announced today that a large number of customers have been given incorrect advice on investment in variants of its portfolio management product, Flexinvest Fri. At the time the bank sold the product, it expected that customer returns after fees would be less than the zero percent interest rate on deposit accounts.
The FSA has been conducting an investigation of the case for some time, focusing on violation of investor protection rules.
"On the basis of the information available, this is a very serious matter. When the public turn to a financial institution, they must be confident that they will only be presented with products that are suitable for them. This is a fundamental prerequisite for a well-functioning financial system. This and other cases in other areas in recent years clearly fail to promote confidence in the financial system. That is why we will of course pursue the matter to the fullest extent," says FSA Director General, Jesper Berg.
The FSA expects to reach a decision on the case in late summer.
Increased risk of poor advice
In connection with its annual market developments article on investment funds, the FSA stated that low interest rates have increased the risk of customers receiving poor advice on investment products.
The risk of poor advice is particularly high when it comes to customers with a low risk preference, a short horizon for their savings or both. The FSA stated that venturing further out on the risk curve than their preferences and economic conditions can bear is not an option for such customers, in connection with the article. The FSA will increase focus on such incidents in its supervisory activities moving forwards.