UK FSA fines firm £560,000 for breaches

LONDON – The UK's Financial Services Authority (FSA) has fined W Deb MVL (WDM) £560,000 for widespread failings in its systems and controls, which resulted in poor accounting systems and inadequate client money protection. The failings, according to the FSA, occurred over a four and a half year period from December 2001 to May 2005.

"The implementation and maintenance of appropriate systems and controls is essential to maintaining market and consumer confidence in the financial system and individual firms," says Margaret Cole, head of enforcement at the regulator. "A firm that fails to meet these basic requirements can pose significant risks to its clients and ultimately its own financial health."

Overall, the FSA found that WDM had breached four of the FSA Principles for Business as well as relevant FSA rules on client money. The primary effect of these failures was that WDM was unable to monitor its own financial position or to comply with its financial reporting requirements adequately, said the FSA in a statement. This resulted in the firm making total provisions of £66.3 million in its accounts for 2004 and 2005 in respect of assets viewed as irrecoverable. These provisions in turn led to concerns about the firm's solvency and to its former parent company, ING, waiving loans totalling £58 million to ensure it remained adequately capitalised.

Cole adds: "In determining the level of penalty, the FSA has taken into account the fact that WDM and ING identified potential regulatory issues at the firm in 2005 and acted properly and responsibly in reporting these to the FSA. The firm, ING and, since it acquired the firm, Evolution Group plc, have been open and co-operative with the FSA in bringing this investigation to a prompt conclusion."

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