BOSSES at Bradford's Yorkshire Building Society have apologised after it was fined nearly £1.5 million for misleading customers about potential returns from an investment product offered in conjunction with Credit Suisse International, which has also been fined by the financial regulator.

The Financial Conduct Authority has fined both organisations for failing to ensure financial promotions for CSI’s Cliquet product were clear, fair and not misleading.

YBS, which is headed by chief executive Chris Pilling, was fined £1.42 million and CSI just under £2.4 million.

Cliquet was designed by CSI to provide capital protection and a guaranteed minimum return with the apparent potential for significantly more if the FTSE 100 share index performed consistently well. While the probability of achieving only the minimum return was between 40 and 50 per cent, the probability of achieving the maximum return was close to zero per cent.

In spite of this, both firms marketed the potential maximum return as a key promotional feature of a product aimed at conservative and risk averse customers and typically sold to unsophisticated investors with limited investment experience and knowledge.

Nearly 84000 customers invested a total of nearly £8 million; with YBS selling around 75 per cent of the accounts.

The FCA said the maximum return figure was given undue prominence in both CSI’s product brochures for the product, which YBS approved and provided to customers and in the Yorkshire’s own promotions, some of which also did not clearly explain how returns were calculated.

Tracey McDermott, FCA director of enforcement and financial crime, said: “Financial promotions are often the primary source of information for consumers and in this case CSI and YBS let their customers down badly. These promotions were a serious breach of the requirement to be clear, fair and not misleading.

“CSI and YBS knew that the chances of receiving the maximum return were close to zero but they nevertheless highlighted this as a key promotional feature of the product. This was unacceptable.”

A YBS spokesman said: “Yorkshire Building Society Group fully accepts the decision made by the FCA and we apologise to our customers On this occasion we have fallen short of our own high standards and of putting our customers at the heart of everything we do."

YBS had agreed a process with the FCA under which affected customers could either exit their account and receive an appropriate rate of interest, or to retain their account until maturity. It would contact affected customers, including those who have closed their account,,in the next few weeks.

“We are committed to doing all we can to put this right as soon as possible and ensure a fair outcome for customers,” YBS said.