The regulator has also barred Thornberry from acting as a compliance officer or having responsibility for client assets.

According to FSA, Christchurch and David Thornberry had insufficient knowledge and oversight of compliance with its client money (CASS) rules which led to serious regulatory breaches.

As per rules, firms must perform daily internal reconciliations of client money balances to ensure that, in the event of insolvency, client money is clearly separate from the firm’s own assets and there are sufficient segregated funds to aid the prompt return of client money. According to FSA, Christchurch failed to apply the correct standard of daily internal reconciliations of client money balances.

The firm failed to put in place adequate trust documentation for any of its 227 client bank accounts, which put client money at risk in the event of the firm’s insolvency, FSA added. The amount of client money held by Christchurch during the period averaged GBP1.2 million.

Richard Sutcliffe, head of the client assets unit at the FSA, said: "Christchurch’s failure to engage properly with the client assets rules is unacceptable. A firm must have adequate systems and controls in place to demonstrate that it complies with the CASS rules at all times. Otherwise clients are exposed to significant risks in the case of insolvency, fraud or poor handling of client money.

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"We expect approved persons and firms to take their regulatory responsibilities seriously, including in relation to client money and assets, and will take action against those who fail to do so."

Christchurch and Thornberry agreed to settle at an early stage and therefore qualified for a 30% discount. Without the settlement discount the fine would have been GBP38,000 for the firm and GBP16,500 for Thornberry.