Danish FSA warns Söderberg & Partners over pensions advice

Denmark’s Financial Supervisory Authority (FSA) has issued three injunctions to Söderberg & Partners Pensionsmægler A / S for providing “inadequate advice” to customers.

The injunctions were issued on 7 September 2020, as the FSA found that the company had failed to analyse customer requirements and needs and that there was a lack of individual recommendations to customers.

As part of the injuctions, before entering into an insurance agreement with a customer, Söderberg & Partners is required to determine the customer’s requirements and needs and ensure proper documentations of this.

In connection with advice, it must give the customer an individual recommendation and to explain to the customer why the product in question best meets their insurance requirements and needs. Söderberg & Partners is also instructed, in connection with customer advice, to ensure that they do not take out a product that is unsuitable.

The investigation into Söderberg & Partners began in October 2019 when the FSA was made aware of several possible violations. The case prompted the FSA to issue a warning to all independent insurance intermediaries that the interests of pension clients is the only legal consideration when it comes to independent advice.

“When a company wants to market itself as an independent insurance broker, the company must also comply with the legislation that comes with that label. The rules say that the company, in its advice, may only act according to the customer's needs. In advising the customer, the broker must not take into account his own or a third party's interests,” FSA consumer office manager, Ulla Brøns Petersen, said.

“In a specific case, we have seen an independent insurance intermediary with a business concept based on the fact that virtually all customers were automatically offered the same pension product. It is not individual advice, and it is not in the customer's interest.”

In response to the injuctions, Söderberg & Partners Denmark acting CEO, Niclas Ward, said: "We respect the Danish FSA's assessment in the decision. Our ambition is to be a leader in the Danish insurance industry with the most satisfied customers. That ambition is not in line with the weaknesses in the administrative processes, no matter where in the organization they may occur.

"We therefore think it is positive that shortcomings such as those listed are brought to light and that we are held publicly responsible. Söderberg & Partners is continuously working to ensure quality, and in recent years this work has been further intensified. This has led to a number of changes and the development of our internal controls with a view to raising the quality of our activities. This is a process that we will continue to work on."

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