DNB Closet Indexing

In 2021, the Norwegian bank DNB was ordered to pay 350 million Norwegian Kroner in compensation to 180,000 consumers who had invested into a so-called closet index fund. For several years, DNB had sold and marketed three equity funds (DNB Norway, DNB Norway I, and Avanse Norway I) as actively managed investment funds to consumers. However, analyses by our member the Norwegian Consumer Council showed that the funds were in fact passively managed, and should have been marketed to consumers as ‘index funds’ (which charge significantly lower fees to investors). As a result, the Norwegian Consumer Council estimated that consumers paid substantially higher costs in investment fees to DNB.

In 2016, the Norwegian Consumer Council launched a court battle on behalf of ordinary consumers, following evidence of closet index practices by DNB. In 2021, the Supreme Court of Norway ruled in favour of the Norwegian Consumer Council and required DNB to pay compensation to the 180,000 affected consumers.  DNB was required to pay back the equivalent of €34 million to investors who were overcharged for investing in the closet index funds.