Wrap platform fined £3.5m for client money breaches
Integrated Financial has been fined £3.5m by the City watchdog for client money breaches at its wrap platform Transact.
The Financial Services Authority said it discovered that the wrap did not perform daily client money calculations to check amounts in client bank accounts matched the firm's records.
Consequently it failed to identify or fund any shortfalls in its client money bank accounts that may have occurred from buying and selling instructions occurring at different times.
The FSA said Integrated Financial had failed to comply with client money rules between 1 December 2001 and 30 June 2010. During that period the amount of client money held by the firm averaged £508m. The failures meant that money belonging to one client was used to cross-fund other clients and resulted in clients' money being at risk if Integrated Financial became insolvent.
Tracey McDermott, acting director of enforcement and financial crime, said: "Integrated Financial has committed a serious breach by failing to comply with our client money rules for a significant period of time. The FSA has repeatedly emphasised the importance of ensuring that client money is adequately protected."
Mike Howard, the chairman of Integrated Financial, said: "We misapplied the rules. The FSA notice does not indicate that we failed to account for client money, but that we failed to account for it in full compliance with the client money regulations."
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