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View the article online at http://citywire.co.uk/wealth-manager/article/a748252

A 'wake up' call: the implications of Invesco's £18.6m FCA fine

by Dylan Lobo on Apr 28, 2014 at 14:48

A 'wake up' call: the implications of Invesco's £18.6m FCA fine

News that Invesco Perpetual had been fined £18.6 million for risk failings is likely to leave rival fund managers looking over their shoulders.

In its thematic review published earlier this month, Financial Conduct Authority (FCA) indicated it was to get tough on the sector.

'Over the next year we will increase the intensity with which we supervise wholesale conduct to ensure that transactions undertaken by these firms do not have a harmful impact on market integrity,' FCA chairman Martin Wheatley (pictured) said at the time.

The financial watchdog has invested significantly in its asset management arm recently, including the hire of former UBS and Goldmans Sachs managing director James Kelly to act as an adviser.

‘This fine marks a new focus from FCA on asset management sector,’ said Ashley Kovas, head of funds at specialist financial services regulatory consultancy Bovill. ‘The FCA has invested heavily in its team of funds supervisors, so I think we will see more fines like this in the near future.’   

Invesco Perpetual's fine was down poor systems controls.

The FCA said the fund firm broke the rules designed to limit risks to investors on 33 occasions across 15 funds between May 2008 and November 2012, include two high profile funds manager by former manager Neil Woodford.  

The regulator also criticised Invesco Perpetual for using manual record keeping systems, which created the risk of fund mispricing.

‘The fine is wake- up call for fund managers that rely on pen and paper record keeping,' Kovas said. ‘The FCA expects firms to invest in technology to meet regulatory standards and it is not afraid to fine them if it thinks their systems are not up to scratch.’

Kovas also believes those firms which generate big revenues could be on the receiving end of some hefty fines.

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1 comment so far. Why not have your say?

Gillian Cardy

May 06, 2014 at 16:39

The FCA is not afraid to fine them, said Mr Kovas (ex FSA as I recall) except when it's Capita and the regulator has agreed a deal which it could never have agreed if it had understood the enormity of the Arch cru problems and if it had been prepared to admit what its own internal staff already knew but chose to paper over ... before lumbering advisers with all the blame for ... umm ... breaking the rules on liquidity, risk management, cash, asset allocation, valuations, pricing ... surprising how familiar it all sounds isn't it?? And I wouldn't be surprised if IP is somewhat dis-chuffed at being forced to pay when competitors are let off the hook, by the regulator if not the investors themselves,

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