Bankers across Denmark face fallout of scandal linked to overcharging

Bloomberg

Denmark is investigating whether banks besides Danske Bank A/S have recommended loss-making investment products to their clients.
The country’s biggest lender fired one of its star executives after an internal review concluded that management was aware it was charging its retail customers too much for products that were likely to offer very low returns. The bank has pledged to compensate the 87,000 clients affected by the scandal.
Jesper Berg, the director general of the Financial Supervisory Authority in Copenhagen, said in an interview that a probe conducted by his agency raises questions as to how widespread the practice is.
The results could raise questions about bankers’ compliance with so-called fit and proper requirements, which demand they act with “honesty” and “integrity”.
Danske, which is being investigated separately amid allegations it was involved in a vast money laundering scandal, acted fast to crack down on the overcharging affair once the matter became known. Berg said the kind of swift action taken by Danske is critical in ensuring public trust in the finance industry.
“It is not a used car industry,” he said. “People have to believe that, although the banks obviously want to sell their products, they also take into consideration the interests of the customers, because there is such an asymmetry of information.”
Nordea Bank Abp, Scandinavia’s largest financial institution by assets, said that an internal review had concluded that its fees are in line with expected returns. The FSA didn’t disclose which banks were part of its probe.
According to a recent FSA report, customers are increasingly at risk of getting bad investment advice from their banks.