Barclays Bank has been hit with a fine of £7.7 million and faces a compensation bill of up to £60 million for giving bad investment advice to customers.
It follows an investigation by the Financial Services Authority (FSA) which resulted in the city watchdog handing down its largest ever fine for retail banking failings.
Barclays will contact all customers who are affected and pay them compensation where deemed appropriate. Some £17 million in redress has already been paid, with up to £42 million to follow to clients that received unsuitable advice.
Between July 2006 and November 2008 Barclays sold Aviva's Global Balanced Income Fund (the Balanced Fund) and Global Cautious Income Fund (the Cautious Fund) to 12,331 people with investments totalling £692 million.
However, there were a number of issues with the funds and around one in seven investors – most of whom were retired or approaching retirement – complained.
Barclays was found to have failed to ensure that funds were suitable for customers, while staff were not sufficiently trained to explain the risks associated with the funds.
The fsa also found that Barclays:
"Thousands of investors, many of whom were seeking to invest their retirement savings, have suffered," said Margaret Cole, the FSA's managing director enforcement and financial crime.
"To compound matters, Barclays failed to take effective action when it detected the failings at an early stage.
"Because of this, and given Barclays' position as one of the UK's major retail banks, we view these breaches as particularly serious and fully deserving of what is a very substantial fine."
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