FCA takes tough stance on CASS breaches

FCA takes tough stance on CASS breaches

What lessons can be learnt from the recent fining of Aberdeen Asset Managers? Alison McHaffie, Partner in the Financial Services team at CMS Cameron McKenna, believes this is indicative of the Financial Conduct Authority's (FCA) tough new approach.

 

Aberdeen Asset Managers Limited and Aberdeen Fund Management Limited (Aberdeen) has been fined nearly £7.2m by the FCA for failing to identify and properly protect client money placed in Money Market Deposits (MMDs) with third party banks between September 2008 and August 2011.

 

What is the background to this fine?

Client money has been a key focus for the FCA since the collapse of Lehmans and it is taking an almost zero tolerance approach to any failings in Client Asset Sourcebook (CASS) procedures. The Aberdeen fine is an example of this tough approach for client money breaches and of the higher penalties that the FCA now imposes for these type of breaches.

 

What were the key facts in this case?

In this case, the risk to client money was very low and involved institutional clients only. Aberdeen placed the clients' money in money market deposits in order to get a better return for its clients and for risk diversification purposes. However, it did not obtain trust documentation from the banks with which it placed these deposits,

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