The Financial Conduct Authority (FCA) has fined Aberdeen Asset Managers and Aberdeen Fund Management £7.2 million (US$10.8) for failing to properly identify and protect UK client money.

The UK regulator said that the group failed to protect customer money placed in money market deposit (MDDs) with third party banks from September 2008 to August 2011.

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According to the FCA, the average daily balance in MDDs affected by the failure was £685 million (US$1.06 billion).

Aberdeen failed to obtain the right documentation from third part banks when setting up affected accounts incorrectly determining that this money were not subject to FCA rules. In addition, Aberdeen also used inconsistent naming conventions in the same circumstances, generating uncertainties among the funds’ owners, the FCA outlined in a statement.

 

Aberdeen claimed client funds were unaffected

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Aberdeen breached the FCA’s principles for businesses which require firms to protect client assets and organise and control their affairs effectively. This left Aberdeen’s clients at risk of delays in having their money returned if Aberdeen became insolvent.

Aberdeen Asset Management said no clients suffered any loss from the breaches and at no point were client funds mixed with Aberdeen’s own money.

Aberdeen said it has amended the UK procedures regarding bank deposits following the FCA’s guidance. It has also agreed to settle at an early stage, qualifying for a 30% discount to their fine. Without the discount the fine would have been £10.2 million.

Back in 2010, Aberdeen wrote to the FCA’s predecessor, the Financial Services Authority (FSA), saying that they were fully compliant with the relevant rules, after the regulator reviewed their management in May 2009.