Tracey McDermott, head of FCA's Enforcement and Financial Crime division
Aberdeen Asset Managers and Aberdeen Fund Management has been fined £7.2m by the Financial Conduct Authority for failing to protect client money.
Aberdeen failed to identify and protect client money placed in money market deposits with third party banks.
The average daily balance of money held between September 2008 and August 2011 was £685m.
Aberdeen incorrectly determined that this money was not subject to FCA rules, which meant it failed to obtain the correct documentation from third party banks when setting up the affected accounts.
Aberdeen also used inconsistent naming conventions when setting up these accounts, which created uncertainty over who owned these funds.
Aberdeen breached the FCA's principles for businesses which require firms to protect client assets and organise and control their affairs effectively. This left Aberdeen's clients at risk of delays in having their money returned if Aberdeen became insolvent.
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FCA predecessor the Financial Services Authority wrote to compliance officers in 2009 highlighting concerns about client money management and Aberdeen confirmed they were fully-complaint with the rules.
Tracey McDermott, director of enforcement and financial crime at the FCA, said: "Proper handling of client money is essential in ensuring that markets function effectively. Where they fall short of our standards, firms should expect the FCA to step in and take action to avoid a poor outcome for their clients, and ultimately, consumers."
Aberdeen agreed to settle at an early stage, qualifying for a 30 per cent discount to their fine. Without the discount the fine would have been £10.2m.
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