Yorkshire Building Society still a ‘trusted alternative’ to big banks despite fine, building society claims

Yorkshire Building Society branch Yorkshire Building Society branch

Monday, June 16, 2014
4:46 PM

The Yorkshire Building Society (YBS) has staunchly defended claims that it is a “trusted alternative” to the big banks despite being fined for misleading customers.

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The Yorkshire Building Society (YBS) has staunchly defended claims that it is a “trusted alternative” to the big banks despite being fined for misleading customers.

The YBS Group – parent of the Norwich & Peterborough Building Society – and Credit Suisse have been hit with penalties of £1.4m and £2.4m respectively by the Financial Conduct Authority (FCA) for not being clear with inexperienced customers over investments that had almost zero chance of achieving maximum returns.

The fines centred on a product called Cliquet designed by Credit Suisse International (CSI) and sold to nearly 84,000 customers who ploughed in £797m.

It comes after YBS chief executive Chris Pilling told the EDP in February that its group of building societies should be seen as a “trusted alternative” to the mainstream banks that had become embroiled in mis-selling scandals. The structured deposit accounts were sold through its Yorkshire, Chelsea and Barnsley Building Society brands – it is understood that Norwich & Peterborough did not sell the products.

The product offered a guaranteed minimum return plus the apparent potential for significantly more if the FTSE 100 performed well. Regulators said the probability of achieving the minimum return was 40-50pc but there was almost no chance of the maximum being achieved.

Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “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. 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.”

A YBS Group spokesperson said: “The way we’re responding to this review is absolutely in-keeping with our vision and values, as a mutual organisation offering a viable alternative to the banks. We’re keeping customers at the heart of our business and doing all we can to make sure we restore and strengthen their trust in us, not take it away.

“We’re keeping customers at the heart of our business and doing all we can to make sure we restore and strengthen their trust in us, not take it away.

“We do all we can to get things right every time. With a business as complex as ours, and with changing and increasingly demanding regulations, sometimes we’ll get things wrong. When that happens, what’s most important is how we respond. Admitting our mistake and being open, fair and proactive is vital.”

Do you have a business story for the EDP? Contact business writer Ben Woods on 01603 772426 or email ben.woods@archant.co.uk

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