Alexandria Group Plc, one of Finland’s largest investment service companies, has been issued a combined penalty by the FIN-FSA of €1m ($1,138,779) for multiple omissions regarding its services.

The omissions happened between March 1, 2021, and September 30, 2021, and May 11, 2021, to September 30, 2021, and were related to failings around:

• obtaining information on clients before providing investment advice;
• the retention of that information; and
• establishing an internal control mechanism.

Multiple failings

According to FIN-FSA, the Finnish Financial Supervisory Authority, Alexandria Group Plc failed to get all the information about clients that is required by law before providing investment advice to them. Nor did the company secure proper information about their knowledge about investment products, nor the purposes of investing or how losses could affect clients.

Alexandria Group Plc was also found failing to record the information that was collected about the customers’ basic understanding of investing and information relating to their risk profiles.

“Although clients ultimately make the investment decisions themselves in investment advice, recommendations given by the investment adviser are significant factors in the client’s discretion.”

FIN-FSA Director General Tero Kurenmaa

The omissions were discovered during an inspection in 2021–2022, where the authority also found shortcomings relating to Alexandria Group Plc’s:

• internal control mechanisms that address deficiencies and monitor their rectification;
• work instructions for implementing audits of the investment advice process;
• system-technical monitoring of advice; and
• detection of illegal activities.

“Investment advice is a trust-based activity where clients place significant responsibility on the investment adviser for their wealth. Although clients ultimately make the investment decisions themselves in investment advice, recommendations given by the investment adviser are significant factors in the client’s discretion,” stated FIN-FSA Director General Tero Kurenmaa.

“Legislation seeks to ensure sound investment advice, and therefore its provision always requires careful compliance with rules and appropriate conduct.”

Another €90,000 penalty payment

FIN-FSA said that the combined penalty of €1m ($1,138,779) was based on a “comprehensive assessment”, which accounted for factors including:

• the nature, extent and period of the omissions; and
• earlier omissions concerning financial market regulations.

FIN-FSA earlier imposed a €90,000 penalty payment on the company in 2017 for failing to retain information on investment advice provided in a manner allowing verification of the course of events afterwards. The authority also issued a public warning because it failed to get proper information on the client before providing investment advice. It also failed to take proper steps to ensure that the transactions in the advice were suitable for the client. 

Alexandria Group Plc has the right to appeal the decision within 30 days to the Helsinki Administrative Court.