The Financial Conduct Authority (FCA) has fined insurance company Aviva £8.2m for client money and assets failings.
Aviva Pension and Aviva Wrap, an adviser platform, have today (October 5) been fined for failings in the oversight of both its outsourced providers in relation to the protection of client assets.
This is a breach of the FCA’s Client Assets Sourcebook (CASS) rules which are in place to protect client money and custody assets if a firm becomes insolvent.
The client money and assets involved included money in savings, personal pensions and ISAs.
Citi was the outsource provider for the majority of the time Aviva was under review, as well as business process services firm Genpact for one month in August 2015.
Although Aviva had not become insolvent in this time, it failed to properly safeguard client assets between January 2013 and September 2015.
The FCA also found deficiencies with Aviva’s internal reconciliation process which resulted in the under- and over-segregation of client money.
The internal reconciliation process is about matching and clearing transactions for business partners or general ledger accounts.
During the period between February 2014 and February 2015 under-segregation peaked at £74.4m.
Mark Steward, director of enforcement and market oversight at the FCA, said: “This is the first CASS case in relation to oversight failures of outsourcing arrangements.
“We will continue to take action against firms that fall short of our CASS rules.”
The FCA said it considers the failings to be serious even though there was no actual loss of client money or custody assets.
Aviva agreed to settle at an early stage and in doing so it qualified for a 30 percent discount. Without the settlement discount the fine would have been nearly £12m.
Andy Briggs, chief executive of Aviva UK Life, said: “We fully accept the findings of the FCA’s review. This should not have happened and we are sorry.”