Kredittilsynet today revoked Glitnir Privatøkonomi AS’s licences to provide investment services after the firm itself chose to hand in the licences. The firm chose to do so as a result of Kredittilsynet's exposure of extensive violations of the new Securities Trading Act.
Director General of Kredittilsynet, Bjørn Skogstad Aamo, comments: “The revocation is a result of Kredittilsynet’s oversight of investment firms’ compliance with the Securities Trading Act’s rules governing business conduct. The new Securities Trading Act contains a number of new, specific requirements on investment firms’ advice to individual customers. Kredittilsynet will now prioritise oversight of investment firms that provide investment advice to ordinary savings customers, and will take action on any offences committed.”
Kredittilsynet conducted an on-site inspection at Glitnir Privatøkonomi AS on 27 February 2008 with a follow-up meeting on 25 March 2008. The inspection brought to light highly censurable aspects of the investment advice given by the firm. Glitnir Privatøkonomi AS has focused one-sidedly on selling products that provide the firm with a high profit. For this reason Kredittilsynet is of the view that Glitnir Privatøkonomi AS has in a serious and systematic manner breached the Securities Trading Act’s conduct-of-business rules. The firm has allowed profit considerations to take precedence over consideration for the customer and has failed to recommend the financial instruments best suited to customers’ needs.
The circumstances described above would alone have justified revocation of the firm’s licences to provide investment services. However, Kredittilsynet's investigation also revealed that Glitnir Privatøkonomi AS failed to honour its obligation to inform customers of revenues received by the firm from parties other than the customer. This is in itself a significant concern, and Kredittilsynet will follow up breaches of this obligation ahead.
Glitnir Privatøkonomi AS is a subsidiary of Glitnir Bank ASA. Kredittilsynet emphasises that the case concerns Glitnir Privatøkonomi AS alone. The revocation has no repercussions for licences held by other companies in the Glitnir Group and, in Kredittilsynet’s assessment, has no effect of note on the tier 1 capital or financial position in general of Glitnir Bank ASA.
Glitnir Bank ASA operates as a bank under the Norwegian rules and under Norwegian supervision and meets all statutory solvency requirements.
Kredittilsynet will contribute to ensuring that Glitnir Privatøkonomi’s licensable business is wound down in a manner causing no harm to the interests of the firm’s customers.
A complete account of the background to the case and Kredittilsynet’s assessments is given in the enclosed letter dated 10 April 2008.
Enclosure:
Letter of 10 April 2008 to Glitnir Privatøkonomi AS (pdf) [in Norwegian]
Press contacts:
Director General Kredittilsynet Bjørn Skogstad Aamo, on +47 22 93 99 29
Deputy Director General Eirik Bunæs, on +47 22 93 98 20, mobile +47 911 65 817
Head of Section Eystein Kleven on +47 22 93 98 13, mobile +47 906 87 501
Senior Communications Adviser Arild Eide Johansen, tel. +47 22 93 99 94,
mobile. +47 971 52 011
Communications Adviser Merete Ulvund, tel. +47 22 93 99 99, mobile +47 905 99 342
