The FSA has fined Transact’s holding company Integrated Financial Arrangements £3.5m for failing to protect client money.
A final notice, issued by the regulator last week, states that the wrap did not perform daily client money calculations to check that amounts in client bank accounts matched the firm’s records and failed to identify or fund any shortfalls in its client money bank accounts.
This resulted in clients’ money being at risk if Integrated Financial Arrangements became insolvent. The firm should have funded any possible shortfalls from its corporate account.
The second breach relates to a failure to have adequate trust documentation in place for three of its 28 client bank accounts, also putting client money at risk in the event of insolvency.
The failure was noticed as part of an FSA visit to Integrated Financial Arrangements in May 2010, when it was found that the firm had failed to carry out the calculations between December 1, 2001 and June 30, 2010.
The amount of money held during that period averaged £508m.
The FSA notice says: “Integrated Financial Arrangements did not perform any client money calculations between 2001 and 2010 and as a consequence failed to identify or fund any shortfalls in its client money bank accounts.”
Integrated Financial Arrangements chief executive Ian Taylor says: “No client has suffered any detriment or loss as a result of the breaches. Achieving the highest standards in regulatory compliance is of central importance to our business. We will work to reassure clients, shareholders, staff and business partners that the problem is in the past and we are fully compliant.”
Woodruff Financial Planning principal Dan Woodruff says: “It is obviously disappointing to be hit with such a fine but it is a technical breach rather than a serious fundamental problem which is reassuring for advisers.”