The Financial Conduct Authority has fined Aberdeen Asset Managers and Aberdeen Fund Management £7.2m over failing to protect client money.
The failings relate to money held in money market deposits. Clients can hold funds in money market deposits where they have large cash balances in their investment portfolios, in order to generate a return over a fixed period.
The regulator says Aberdeen failed to identify that client money placed in money market deposits with third party banks between September 2008 and August 2011 was subject to client money rules.
The average daily balance affected by this failure was £685m.
Aberdeen did not obtain the correct documentation from third party banks when setting up the affected accounts, and used inconsistent naming conventions when setting up the funds, creating uncertainty over fund ownership.
The FCA says Aberdeen’s failures meant clients were at risk of delays in having their money returned if Aberdeen became insolvent.
Aberdeen had been asked by the FSA to ensure the firm had the correct documentation, following a review in May 2009. Aberdeen wrote to the FSA in 2010 saying it was fully compliant with the rules.
FCA director of enforcement and financial crime Tracey McDermott says: “Proper handling of client money is essential in ensuring that markets function effectively. Where they fall short of our standards, firms should expect the FCA to step in and take action to avoid a poor outcome for their clients, and ultimately, consumers.”
In a statement, Aberdeen says: ”Aberdeen confirms it has today agreed to a fine of £7.2m from the FCA in full and final settlement of past inadvertent breaches of UK client money rules which Aberdeen identified and reported to the regulator.
”No clients suffered any loss as a result of the breaches and at no point were client funds mixed with the Aberdeen’s own money. We regret that the situation arose, have co-operated fully with the FCA in the course of its investigation and have amended our UK procedures regarding bank deposits following the FCA’s guidance.”