UBS fined $14.7m for product mis-selling

13 February 2013

UBS has been fined £9.45 million ($14.7 million) in the UK for the mis-selling of the AIG Enhanced Variable Rate Fund (EVRF), it has emerged.

The Financial Services Authority (FSA) announced yesterday (12 February) that it had decided to impose this penalty on the Swiss bank due to the fact its wrongdoings in the sale of this product resulted in customers being exposed to an "unacceptable risk" of an unsuitable sale of the fund.

The British regulator established that UBS sold the EVRF - which was designed to provide improved returns through making an investment in asset-backed securities and floating rate notes - to 1,998 consumers with high net worths between 1 December 2003 and 15 September 2008.

Initial investments in the EVRF from these individuals totaled some £3.5 billion but after the collapse of the global banking system - which caused the value of the EVRF to plummet - UBS prevented investors from withdrawing their money immediately.

Tracey McDermott of the FSA commented: "UBS's conduct fell far short of what its customers deserved and what the FSA requires."

By Gary Cooper

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