According to the FSA, BIM did not put trust letters in place for certain money market deposits, while also failing to take sufficient care of activities regarding the identification and protection of client money.

BIM confirmed the charges in a statement and told PBI that the matter was now closed.

The FSA’s client money rules state that firms must have a trust letter from any bank holding its client money to ensure that, if the firm becomes insolvent, this money is easily identifiable.

The money must also be ring-fenced from the firm’s own assets so it can be quickly returned.

BIM, one of the world’s largest asset managers, allegedly failed to obtain letters relating to some money market deposits placed with third party banks from 1 October 2006 to 31 March 2010.

The FSA’s statement added that the average daily balance affected by this failure was more than £1.36bn.

However, the UK regulator concluded that the error was not deliberate and that BIM had reported the problem to the FSA.

The FSA also said that no clients actually lost money as a result of the error, and that BIM has since remedied the situation while putting in place strong systems and controls concerning client money protection.

BIM have said that a dedicated client money team had been established, led by a managing director responsible for oversight of BIM’s client money obligations.

The firm agreed to settle at an early stage and received a 30% discount on the penalty.

Without the discount BIM would have been forced to pay the FSA £13.6m.


Source: Private Banker International