Britain's financial watchdog said on Wednesday it had fined a unit of Deloitte & Touche, the world's second-largest accountancy firm, 750,000 pounds ($1.4 million) for serious compliance failings.
Demonstrating its tougher line on enforcement, the Financial Services Authority (FSA) said the fine against Deloitte & Touche Wealth Management Ltd was the largest it has ever levied against a financial advisory firm.
The FSA also said it would have put the firm out of business for mis-selling products and poor record-keeping which lost customers money, had new management not been installed in 2002.
“Effective compliance procedures are fundamental to consumer protection and are not to be disregarded by a firm's senior management,” said Andrew Procter, FSA director of enforcement.
The FSA said Deloitte & Touche Wealth Management's failure to carry out a key pensions review on time could have been avoided as the parent company had plenty of specialists in this area.
Those specialists, however, were deployed to work for paying clients.
“We very much regret this matter, which arises from regulatory failures in our subsidiary Deloitte & Touche Wealth Management Ltd between 1997 and 2001,” Gerry Paisley, the managing partner responsible for regulation and risk management at Deloitte & Touche, said in response to the fine.
“When the issue was identified, swift and decisive action was taken to shut down the business. It was subsequently restarted under entirely new management in 2002.”
The FSA's fine is three times that levied on wealth-management firm St James's Place in November for serious inadequacies in monitoring and record keeping.
Stung by criticism it has not moved swiftly to protect consumers from mis-selling scandals and market abuse, the FSA has adopted a hardline approach under the new leadership of Chairman Callum McCarthy and Chief Executive John Tiner.
Since they took over last autumn the watchdog has levied millions of pounds in fines including 2.3 million pounds against mortgage bank Abbey National Plc for lax checks at its retail and asset-management unit.
Abbey's fine was the second-biggest by the FSA after the $6.4 million punishment meted out to Credit Suisse First Boston in 2002 for misleading Japanese authorities in 1996 and 1997.
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