FSA fines Towry after nearly 10 years of failings

Towry, the financial adviser, was slapped with a £494,000 penalty yesterday for failing to look after its clients' money properly and misleading the Financial Services Authority. The watchdog said the breaches took place over nine years and castigated the company, based in London, for its response to a "dear chief executive" letter that warned firms to take seriously the treatment of clients' money.

Towry wrote back to say it was "fully compliant" with the rules in the FSA's "Client Asset Sourcebook" but on a visit regulators found this had not been the case for nearly a decade.

The watchdog said that had Towry become insolvent its clients could have lost some of their money.

The FSA said that the firm's failure to ensure that client money was properly segregated from Towry's money came as a result of it "funding any shortfalls of client money from Towry's bank account to the client money bank accounts" or "withdrawing any excess of client money from the client money bank accounts to Towry's bank account as required".

It also said the firm was unable to distinguish "without delay" client money held for one client from client money held for any other client.