The UK Financial Services Authority has fined Credit Suisse (UK) Ltd. £5.95 million ($9.55 million) for failings in the suitability controls of the sale of structured products by its private bank.

The FSA says that between January 2007 and December 2009 Credit Suisse UK customers invested over £1 billion in structured capital at risk products (SCARPs), which are complex financial products. However, during that period there were a number of serious failings in the systems and controls in respect of those sales, it adds.

These failings included: inadequate systems and controls in relation to assessing customers’ attitudes to risk; failing to take reasonable care to properly evidence the suitability of SCARPs for customers; and, failing to monitor staff effectively to ensure that they took reasonable care when giving advice. The problems were uncovered by the FSA during a supervisory visit to the firm, which subsequently led to an enforcement investigation.

Since the discovery of these failings, Credit Suisse UK has made a significant number of changes to its advisory processes and has enhanced the systems and controls in place to ensure the suitability of its advice to its customers, the FSA notes. It has also agreed to carry out a review, overseen by an independent third party, in relation to SCARP purchases during the period identified. If a customer is found to have been advised to purchase an unsuitable product, redress will be paid to the customer by Credit Suisse UK to ensure that they have not suffered financially as a result.

Credit Suisse UK agreed to settle at an early stage entitling it to a 30% discount on its fine.

“We have seen all too frequently the consequences of financial services firms failing to implement proper systems and controls to ensure their customers invest in suitable products. A proper assessment of customers’ individual needs and circumstances is even more critical where firms are selling complex products like SCARPs,” said Tracey McDermott, acting director of enforcement and financial crime.

“Credit Suisse UK’s systems were not up to the level we, and their customers, are entitled to expect. Our recent ‘Dear CEO’ letter to the wealth management industry made it clear that significant and widespread failings exist in this area and standards need to improve. This penalty should leave firms in no doubt about our determination to make that happen,” McDermott added.

£1= approx. $1.60