JP Morgan has been fined GBP3.08 million (US$4.6 million) by Britain’s Financial Conduct Authority (FCA) for being unable to prove it was giving clients the right advice.
According to the FCA, the shortcomings were not corrected until the watchdog brought them to JP Morgan’s attention while conducting a wider review of wealth management firms.
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JP Morgan, reportedly, did not have complete records and the management did not have the information "they needed to recognise this" either.
The FCA identified key areas of concern including, client files not being kept up to date or retaining important client suitability information, including client’s demands and needs.
Explanation of investments in relation to those demands and needs, a adequate computer-based record system and communications to confirm client suitability profiles were not always sent to clients, as required by in house policy.
In a statement JP Morgan said: "We have fully cooperated with the FCA and have enhanced our procedures to ensure that they are compliant with regulatory requirements.
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By GlobalData"As the FCA has noted in its press release, there has been no detriment to customers identified to date."
FCA director of enforcement, Tracey McDermott, said in a statement,"No matter who they are, customers of wealth managers should be able to expect the firm to keep complete, up to date client records so that they can give the right advice."
In March 2013, the wealth management divisions of six retail banks were criticised by the FSA, and the managing director of the regulatory body, Martin Wheatley, expressed concern over how wealth managers treat their clients, in a speech at the Chartered Institute for Securities & Investment.
