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FCA fines Aberdeen £7.2m
03 September 2013
Firm cooperates with regulator over client asset protection failures
money market deposits
The UK Financial Conduct Authority (FCA) has fined Aberdeen Asset Management and and Aberdeen Fund Management £7.2m ($11.2m) for failures in protecting client assets over a three year period.
The FCA said the firms failed to identify – and therefore protect – monies placed in money market deposits (MMDs) with third party banks from September 2008 to August 2011 with an average daily balance of £685m.
The FCA said Aberdeen failed to set up correctly documented accounts for the money and used inconsistent naming conventions when setting up the accounts. Aberdeen also wrongly determined that the money was not subject to FCA rules on client money, which ensure that should a firm fail, client assets are clearly identified, protected and can be returned as soon as possible.
Tracey McDermott, director of enforcement and financial crime said: “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.”
Aberdeen cooperated with the FCA's investigation and agreed to an early settlement, leading to a 30% reduction in its fine from £10.2m to £7.2m.
The FCA found that Aberdeen had breached its principles on protecting client assets, risking delaying in returning money in the event of Aberdeen becoming insolvent. The FCA also found that Aberdeen had incorrectly told the the the FCA’s predecessor, the Financial Services Authority, that it had the correct documentation and was fully compliant with the relevant rules.