3rd Sep 2013 10:53
LONDON (Alliance News) - Aberdeen Asset Management PLC Tuesday was fined GBP7.2 million by the UK Financial Conduct Authority over failing to protect client money in third-party banks over a three-year period.
The FCA said the fund manager failed to identify, and therefore properly protect, client money placed into money-market deposits with third-party banks between September 2008 and August 2011. Clients with large cash balances in their investment portfolios often have funds placed into such deposits, usually for a fixed time period.
Aberdeen was inconsistent in its account-naming conventions, the FCA said, and the fund managers' enquiry into the failings suggested that some third-party banks were unclear on the identity of the owner of the deposits. The FCA found that in an insolvency situation the clients' deposits weren't ring-fenced, which could have led to delays in returning money to clients, or even shrinking of deposits, in the event that debts had been owed to Aberdeen by the banks.
However, Aberdeen said there was no risk of client money being lost because of set-off, as the management fund had not borrowed any money from the third party banks. It did concede, though, that clients could have "potentially faced a delay in the return of their money in the highly unlikely event that the company became insolvent".
The FCA said it considers the failings to be serious because of Aberdeen's status as a leading asset management firm with significant operations in the UK and globally. The FCA said there was a heightened awareness of the need to handle money properly during the period, as a result of the collapse of Lehman Brothers in 2008. The FCA said Aberdeen had responded to letters sent to its chief executive and chief compliance officer in January 2010 and March 2009, confirming it was compliant with client money handling regulations.
The FCA noted that there was no actual loss of client money, despite the failings.
Aberdeen agreed to settle at an early stage of the investigation, thereby qualifying for a 30% discount on the fine, which would otherwise have been GBP10.3 million.
Aberdeen described the breaches of UK client money rules as "inadvertent" and said it "regrets the situation arose". It said it has amended its UK procedures regarding bank deposits following the FCA's guidance.
Aberdeen shares were Tuesday quoted at 365.48 pence per share, down 2.52 pence.
By Samuel Agini; [email protected]; @samuelagini
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