Investment - Articles - FSA fines McInroy & Wood Limited for client money breaches


 The Financial Services Authority (FSA) has fined McInroy & Wood Limited (MWL), a discretionary investment management firm based in East Lothian, £15,050 for breaching the FSA’s client money rules.

 Under the FSA’s client money rules, firms are required to keep client money separate from the firm's money in segregated accounts with trust status. A firm must have a trust letter from the bank holding its client money to ensure that, in the event of the firm’s insolvency, client money is clearly identifiable and is ring-fenced from the firm’s own assets so that it can be promptly returned.

 MWL failed to obtain a trust letter in respect of 22 segregated off-shore retail client bank accounts, which contained an average balance of £666,000.

 The FSA has issued several communications to firms on the rules for protecting client money, so firms are aware this is a high profile issue. MWL missed several opportunities to review its client money arrangements in relation to these 22 off-shore accounts so the error remained undetected by the firm for over four years, between May 2006 and August 2010.

 Richard Sutcliffe, head of the client assets unit, said:

 "McInroy & Wood’s failure to check whether it had a trust letter in place for these 22 accounts exposed its clients to risk in the event of insolvency.

 "There is no substitute for a trust letter as it confirms client money is ring-fenced from the firm’s own assets, readily identifiable and aids the prompt return to clients.

 "The FSA has repeatedly emphasised the importance of ensuring that client money is adequately protected and firms of all sizes must ensure client money is segregated and that this is acknowledged with a trust letter in accordance with FSA rules."

 MWL did not enter into insolvency, promptly rectified the failing and no clients suffered any losses as a consequence of the breach.

 The firm worked constructively with the FSA in the course of its investigation and agreed to settle at an early stage. In doing so it qualified for a 30% discount on the financial penalty.

Back to Index


Similar News to this Story

Inheritance Tax raises almost GBP6 billion in 8 months
December’s update from HMRC shows that Inheritance Tax (IHT) receipts reached £5.7 billion through the first two-thirds of this financial year (April
PIC completes first Mosaic buyin with GCB Pension Fund
Pension Insurance Corporation plc (“PIC”) has concluded its first full scheme buy-in within Mosaic, PIC’s streamlined service for pension schemes with
Airways Pension Scheme complete longevity hedge with MetLife
The Trustees of the Airways Pension Scheme (“the Scheme”), Metropolitan Tower Life Insurance Company, a subsidiary of MetLife, Inc., (“MetLife”) and Z

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.