Towry is fined £500,000 after FSA's Dear CEO letter
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The FSA has fined Towry Investment Management £494,900 for providing misleading information to the FSA and for client money breaches spanning over nine years.
Between December 1, 2001 and February 21, 2011, Towry held client money in the range of £14.7m to £187.9m and an average of £50.6m at any given time.
In January 2010, the FSA sent a Dear CEO letter to firms as part of a thematic project to ensure the swift return of client assets in the event of firm insolvency.
Towry responded to the Dear CEO letter saying it was compliant but when the regulator visited Towry in November it found the firm was in breach of its rules.
Firms are required to carry out internal reconciliations to match clients’ entitlement to client money with records and accounts of client money actually held in client money accounts and transaction accounts.
Prior to July 2009, Towry performed its reconciliations on a monthly basis, which the FSA says was inadequate.
After July 2009, some of Towry’s client money accounts were outsourced to a third party. The third party provided Towry with a daily listing of negative client money balances which required topping up but did not consolidate individual clients’ cash balances over multiple bank accounts. Towry was therefore topping up too much into client money accounts.
FSA director of enforcement and financial crime Tracey McDermott says: “Taking steps to ensure information provided to us is properly considered, up to date and correct is a basic regulatory requirement. Firms should be in no doubt about how seriously we regard such failures.”
Towry chief executive Andrew Fisher says: “While I am pleased to confirm there has been no client detriment or loss of any client money, it is regrettable we have made these errors. We have co-operated fully with the FSA and have made changes to our processes, working with our auditors KPMG to address the problems identified.”
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