By Dan Byrne for AMLi
DANSKE BANK has been fined DKK 9 million (€1.2 million) for leading customers into an investment that it knew would end up in loss-making territory.
The bank – one of the largest in Europe – was found to have advised on and sold their product Flexinvest Fri to approximately 10,000 customers even though it was aware, since 2017, that the product was expected to yield a negative net return for them over five years.
The bank did not tell those customers about this issue, according to a statement from Danish State Prosecutor for Serious Economic and International Crime (SØIK).
Danske has agreed to pay the fine, which comes after an inquiry from the Danish Financial Supervisory Authority, and subsequent charges from SØIK.
SØIK alleged that Danske had violated a Danish ban on misleading information to customers or potential customers, the statement read.
“It is essential that customers can be confident that they will receive correct advice from Danish banks,” said acting public prosecutor Peter Fiig.
“A case like this is serious, as there is a risk that customers’ general confidence in the financial system will be weakened.”
The scale of the fine was rooted in the fact that such a large contingent of customers had been affected, and that the bank had an extensive period of time to warn them and did nothing, SØIK said.
However, this was offset by the fact that the bank cooperated with authorities once police had become involved, and paid compensation to the relevant customers.
The news comes as another PR blunder for a bank struggling to shed the negative reputation of various other financial scandals, most of which also involved an alleged lack of oversight and communication.
The largest of these scandals to surface found that Danske’s now-defunct Estonian branch facilitated the transfer of billions of laundered cash from Russia to the west.
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