Integrated Financial, the company that owns
Transact has been fined £3.5m ($5.5m) for by the FSA for failings
in the protection of client money.
The FSA said Integrated Financial Arrangements
did not perform daily client money calculations to check whether
amounts in client bank accounts matched the firm’s records.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
A statement from the regulator said the fine followed a visit in
May 2010 when it found that “although it had segregated client
money from its own money upon receipt it had failed to comply with
client money rules between December 1 2001 and June 30 2010.”
This meant that it money belonging to one
client was used to cross-fund others, putting it at risk if
Integrated Financial became insolvent.
The company also failed to have adequate risk
management systems in place in relation to these accounts.
Jim Muir, director of AutoRek, a leading
provider on client money and data reconciliation said:
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData“Despite years of regulation of the principle
of segregating client and firm money, another shocking default has
revealed significant client exposures arising from a failure to
implement this most fundamental tenet of client protection. The
market clearly didn’t take the threat seriously and plan adequately
to change procedures and systems.
“Worryingly, the people in charge of the
client money processes and their supervisors didn’t (and some still
don’t) fully understand the principles or the rules. The review
processes of the auditors, internal and external, as well as those
of the regulators have been found wanting.”
“It is surely only a matter of time before we
see custodial sentences for such breaches and even the possibility
of auditors being struck off or bankrupted. The excuses for
non-compliance aren’t washing anymore. The fact is, it’s doable and
it’s mandatory because it is good practice.”
Integrated Financial said it would pay the
fine from its own resources so it will have no effect upon the
operation of client portfolios.
