Transact, the UK’s largest wrap platform, has been fined £3.5m by the Financial Services Authority for client money breaches.

Integrated Financial, who offer Transact, failed to conduct daily calculations of client money for almost 10 years.

Under FSA rules, firms are required to keep client money in client bank accounts separate from the firm’s money and conduct daily calculations to check these amounts match the firm’s records.

The reasons for these checks are to safeguard client money in the event of the firm’s insolvency and to identify or fund any shortfalls in client money bank accounts.

Between December 2001 and June 2010, Integrated Financial failed to perform these calculations.

The average amount of client money held during the period averaged £508m.

The findings were discovered on an FSA visit to Integrated Financial in May 2010.

It also failed to put adequate trust documentation in place for three of the accounts and failed to have adequate risk management systems in relation to client money.

Tracey McDermott, acting director of enforcement and financial crime, said: “Integrated Financial has committed a serious breach by failing to comply with our client money rules for a significant period of time.

“Adhering to these rules not only ensures greater protection of clients but is also important to maintain confidence in the financial markets.”

Integrated Financial agreed to settle at an early stage, entitling it to 30 per cent discount on the fine. Without the discount the fine would have been £5m.

The fine represents one per cent of the average client money held during the period.

Ian Taylor, chief executive of Integrated Financial, said: “The essential point to make is that no client has suffered detriment or loss as a result of the breaches. Nevertheless, we are chastened. Achieving the highest standards in regulatory compliance is of central importance to our business.”