N&P expands suitability probe to more funds

Norwich & Peterborough (N&P) building society has widened its investigation into advice by branch staff to include recommendations to invest in funds from JP Morgan, Standard Life and Legal & General.

The building society has hired third party compliance firm Huntswood to review recommendations by N&P's now defunct Financial Advice Service going back at least to 2007.

N&P has been brought to the verge of collapse and impending takeover after the FSA found widespread poor advice on Keydata products by N&P IFAs, which cost the building society £57m in compensation.

In the FSA's final notice on the N&P Keydata scandal, the regulator said it would be looking into the suitability of advice on other products sold by N&P.

Letters to N&P customers have now surfaced which give details of other recommendations under review.

These include advice to separate customers in their sixties and approaching retirement to invest in funds including the JP Morgan Natural Resources fund, the Standard Life Distribution bond, the L&G High Income Trust A and the L&G UK Recovery fund.

In the case of the JP Morgan Natural Resources fund investment, the N&P IFA gave the clients an attitude to risk rating of nine, despite the fact they were nearing retirement.

An N&P spokesperson confirmed Huntswood is carrying out a suitability review on its behalf, but refused to give details of which other investment advice is being revisited.

"The third party is looking at advised sales which cover a range of financial products. The review will go on as long as it takes, that is up to the independent reviewer," the spokesperson said.

Liability for any compensation lies with N&P, they added: "It is our liability and we would pay redress where appropriate."

N&P members are being urged by the building society to back a proposed takeover by the larger Yorkshire building society, and warned in a letter that failure to do so could lead to branch closures and ‘degradation of services'.

A special meeting is planned in Peterborough on 22 August to allow members to discuss - and vote on - the takeover proposals.

If the recommendation is approved, the deal is due to be completed on 1 November this year