The FCA has issued its first fine for breaches of client asset rules under the new penalty regime. The fine was imposed on 11 June 2013 on retail investment and capital markets firm Xcap Securities PLC for failing to arrange adequate protection for clients’ assets. In particular, Xcap were found to have failed to segregate client and firm money properly, to maintain accurate records of client money and assets, and to carry out accurate client money reconciliations.
Applying to breaches from 6 March 2010, the new CASS penalty system involves fines calculated as a percentage of client money and safe custody assets held by the firm during the period in which the firm was in breach. The FCA anticipates that this will lead to higher levels of fines, demonstrating its commitment to consumer security and confidence, and acting as a deterrent to bad practice.