Norway's Financial Supervisory Authority has published an inspection report and decision imposing a NOK 750,000 administrative fine on Norse Securities AS for breaches of investment advice, cost reporting and recordkeeping requirements. The penalty concerns brokers pressuring retail customers into complex, risky structured products and the firm's failure to demonstrate that customers received correct and complete cost reports for 2023 and 2024. The inspection also identified broader weaknesses in customer disclosures, suitability assessments and compliance controls.
In three documented cases, brokers continued pursuing investments after customers repeatedly expressed objections, without adequately addressing concerns about product knowledge, potential losses or existing exposure. Separate recommendations to switch investments lacked analyses of costs and benefits and suitability statements. Initial sales communications emphasized potential returns without sufficiently explaining the risks, including the possibility of losing the entire investment. Suitability statements were generally too generic to explain why individual recommendations matched customers' circumstances.
The cost reporting failures affected all customers. Historical reports had been overwritten, preventing verification of what customers received, while the reporting format used in 2023 and 2024 omitted costs as a percentage of the amount invested. The compliance function failed to identify or adequately follow up central weaknesses, including sales pressure and deficient suitability statements, and lacked sufficiently independent scrutiny of trading frequency and customer costs. Related shortcomings had been raised in earlier inspections, which aggravated the breaches underlying the fine. The authority expects immediate measures to strengthen compliance and plans further supervisory activity.