The British markets watchdog accused the wealth management company that it failed to recognize and safeguard clients’ money in money market deposits (MMDs) with third party banks during September 2008 and August 2011.
In the event of failing of a company, the money held on behalf of its clients is clearly identified, protected and returned as soon as possible, as per the rules defined by the FCA.
The asset manager wrongly concluded that this money is not subject to FCA rules and failed to receive the correct documentation from third party banks when setting up the affected accounts, alleged the UK market regulator.
Moreover, Aberdeen also used contradictory naming conventions when setting up these accounts, which created uncertainty over who owned these funds.
Stating that client assets protection is a regulatory priority, the FCA aims to protect and enhance the integrity of the financial system by ensuring the smooth functioning of the relevant markets.
Aberdeen breached the FCA’s principles for businesses, and put its clients at risk of delays in having their money returned if Aberdeen became insolvent.
After a review in May 2009, FCA’s predecessor, the Financial Services Authority (FSA) ordered Aberdeen to ensure the correct documentation and in 2010, the company informed FSA that they were fully compliant with the relevant rules.
FCA enforcement and financial crime director Tracey McDermott said that 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," McDermott added.
Extending its full co-operating with the FCA in the investigation and settling the case at an early stage, Aberdeen availed a 30% discount to their fine, otherwise it would have been £10,275,000.
