View more on these topics

FSA fines Credit Suisse £5.6m for systems and controls failing

The FSA has fined the UK operations of Credit Suisse £5.6m for failing to properly supervise a structured product group in its investment banking division.

The FSA says that a week after announcing its financial results in February, Credit Suisse announced it had identified mismarking and pricing errors by a small number of traders and that it was repricing certain asset-backed securities, leading to a £1.3bn writedown.

The regulator says the breaches of its principles related to the pricing of certain asset backed securities held by the Structured Credit Group within the firm’s investment banking division.

It says the subsidiary failed to adequately supervise the business of SCG and did not act in a timely way on concerns it had identified about the pricing of certain asset-backed positions.

Also, the FSA says adequate systems and controls were not put into place by the subsidiaries which meant it failed to recognise for around five months that certain SCG asset backed positions were wrongly valued.

Credit Suisse commissioned a detailed review of the causes of the write down and identified serious failures in the subsidiaries’ controls over the management of the SCG. Senior management accepted the findings of the review and a comprehensive remedial programme is being undertaken.

FSA director of enforcement Margaret Cole says: “The penalty reflects our tougher stance on enforcement and our policy of imposing higher penalties to achieve credible deterrence.

“It is imperative, particularly in more challenging financial conditions, that firms have in place appropriate systems and controls to manage their risks. The subsidiaries here failed to take appropriate steps to control the potentially high risk combination in the Structured Credit Group’s holdings of exotic products, opaque valuations and high leverage.

“The sudden and unexpected announcement of the write down had the potential to undermine market confidence.”

Recommended

FSAS director Mackay to retire

Alistair Mackay, director of Lighthouse Group subsidiary Financial Services Advice and Support is to retire at the end of the year. Executive director Andrew Snowball will work alongside fellow co-founder Alan Pinkerton to form the management team.

Arab tigers burn bright

It is now possible to invest in the Middle East through a Standard & Poor’s AA-rated fund owned by Mashreqbank, domiciled in Bahrain, which is more strictly regulated than elsewhere in the Middle East.

UK policy: Kate Moss and short-termism

“Nothing tastes as good as skinny feels,” said supermodel Kate Moss, who is not often credited for her insights into policy making. Perhaps she should be. In politics, as in matters of diet, the course of action that is the best over the long term is often not the most desirable course of action in the short term. Add the instant gratification of the democratic electoral cycle and, instead of good policy making, you sometimes get the equivalent to a midnight binge in front of the fridge.

Read more


Important information

Investment risks

The value of an investment and any income from it can fall as well as rise and you may not get back the amount originally invested. Forecasts and past performance are not a guide to future performance. Some information and statistical data herein has been obtained from sources we believe to be reliable but in no way are warranted by us as to their accuracy or completeness. These are Neptune’s views and as such this document is deemed to be impartial research. We do not undertake to advise you of any change to our views.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com