Two more fined over client cash protection

THE City watchdog's clampdown on companies failing to properly protect client money gathered pace yesterday as two more firms were hit with fines.

The Financial Services Authority (FSA) slammed Close Investments and broker Rowan Dartington with fines of 98,000 and 511,000 respectively after ruling that both firms had failed to properly protect and segregate client money.

Under FSA rules, companies have to ring-fence client money in separate accounts that have trust status in order to protect customers in the event of the firm going bust.

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JP Morgan Securities was last week handed a record 33.3 million fine for failing to properly segregate billions in client funds over a seven-year period.

Margaret Cole, director of the enforcement and financial crime division at the FSA, said: "Customers should be able to assume that authorised firms have the right systems and controls to safeguard their assets.

"CIL put clients at risk of significant financial loss by failing to segregate client money appropriately for a period of two years – this is simply unacceptable."