FILE PHOTO: General view of the Danske Bank building in Copenhagen, Denmark, September 27, 2018. REUTERS/Jacob Gronholt-Pedersen

COPENHAGEN (Reuters) - Denmark's financial watchdog said on Friday it had reported Danske Bank DANSKE.CO to the police for overcharging customers, the latest blow to the lender as it tries to restore trust after involvement in a major money laundering scandal.

The FSA said in June it was investigating the bank for failing to inform customers that it expected a poor performance from its Flexinvest Fri investment product and for continuing to sell it to new customers after raising fees associated with it in 2017.

“This is a very serious breach of the consumer protection rules (which) can also weaken confidence in the financial system,” the FSA said in a statement.

The case is another blow to the reputation of Denmark’s biggest bank which is trying to limit the fallout from a scandal over payments totaling 200 billion euros ($223 billion) made through its small Estonian branch, many of which the bank said were suspicious.

“As expected, we have received harsh and justified criticism from the FSA,” said Danske’s Chief Executive Chris Vogelzang, who took over in June.

“Our customers must be able to trust that we have their best interests in mind and that we provide correct and adequate information and advisory services to them. We have not lived up to this in this case,” he said.

Danske has said it will compensate around 87,000 customers who invested in the Flexinvest Fri product for a total of around 400 million Danish crowns ($60 million)