The FSA has fined financial planning and portfolio management firm Christchurch Investment Management £26,600 for failings to adequately protect client money.
Compliance officer David Thornberry has been fined £11,550 and banned from acting as a compliance officer or having responsibility for client assets, the first time the FSA has issued such a ban.
Firms are required to carry out daily internal reconciliations of client money balances to ensure that in the event of insolvency client money is separate from the firm’s own assets. The regulator says Christchurch failed to apply the correct standard of daily internal reconciliations of client money balances.
When the FSA visited Christ-church in May 2010, it found the firm had failed to comply with the FSA’s client money rules since November 2007.
This included failing to put in place adequate trust documentation for any of its 227 client bank accounts, which put client money at risk in the event of the firm’s insolvency. The amount of client money held during the period averaged £1.2m.
The FSA says Thornberry had no formal training for his compliance oversight role, was not aware of the client money rules relating to trust status letters and failed to review and test the existing systems and controls. He also failed properly to allocate duties for handling client money.
FSA head of the client assets unit Richard Sutcliffe says: “Christchurch’s failure to engage properly with the client asset rules is unacceptable.”