Bank’s €175m fine for failing to protect client assets
Bank of New York Mellon (BNY), which has branches across the world including in Dublin and London, was handed the multi-million euro fine for a “particularly serious” failure to comply with the FCA’s rules between November 2007 and August 2013.
“Our custody rules are in place to ensure that clients are protected in the event of insolvency, FCA acting director of enforcement and market oversight, Georgina Philippou said.
“The firm’s failure to comply with our rules including their failure to adequately record, reconcile and protect safe custody assets was particularly serious given the systematically important nature of the firm and the fact that safeguarding assets is core to their business.”
The FCA found that had the firm become insolvent, the value of assets at risk would have been significant – a situation that would have been compounded given the “considerable stress” in the market at the time of the breaches as the world’s financial system was reeling.
BNY said in a statement that it had co-operated with the FCA to address the issues and agreed to pay the £126m, which included a discount in recognition of the bank’s attempts to resolve the issue quickly.
Among the FCA’s findings was that BNY had failed to take necessary steps to prevent client assets mixing with its own in some instances.
The FCA has clamped down on firms that fail to comply with client-asset rules following the financial crisis, levying 15 sanctions since 2010, a spokesman for the regulator said. Prior to that year, only two companies had been fined for such breaches.
Barclays Plc was fined £37.7m (€52.4) in September for not properly protecting £16.5bn (€22.9bn) of client assets, the FCA’s second-largest penalty. In 2011, the London-based bank was ordered to pay £1.1m (€1.5m) for similar violations.
BNY Mellon received a 30% discount for early co-operation, without which the fine would have been £180m.
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