Aviva Investors fined €30,000 for breaches over client assets

AVIVA INVESTORS Ireland has been fined €30,000 by the Central Bank for regulatory breaches uncovered by the authority.

The asset management company, which is part of global insurance group Aviva, entered into a settlement agreement with the Central Bank after six breaches of regulations relating to client assets were identified during a 2009 inspection.

The regulatory lapses included the failure to properly designate the firm’s internal records in relation to 184 client accounts, and failing to make it clear that certain client assets did not belong to the firm. However, the Dublin company said the breaches did not result in financial loss for its clients. The Central Bank said the breaches arose because the firm’s client asset requirements policies and procedures were “inadequate” and in some cases were not followed.

The company was reprimanded by the authority and required to pay a penalty of €30,000. This sum reflected the importance the Central Bank places on client asset requirements, which it described as a “key protection” for customers of authorised investment firms.

Other breaches included the failure to carry out required reconciliations, and failing to get necessary confirmations from seven credit institutions before lodging client assets with those institutions.

“This is the second settlement agreement we have concluded for breaches of the Central Bank’s client asset requirements in the past nine months,” said director of enforcement Peter Oakes.

A settlement was reached with financial services provider the Endowment Policy Purchasing Company last November.

“Compliance with the requirements is highlighted as a priority area in our enforcement strategy and we will continue to focus resources to help achieve acceptable standards across industry,” Mr Oakes said.

The focus of client asset requirements is to ensure clients’ ownership rights are safeguarded, particularly in the event of an insolvency situation, and to prevent firms from using clients’ assets in a manner contrary to the client’s express consent.