Featured Images

Aviva fined £8.24m for outsourcing failures

Savings and investment manager Aviva has been fined £8.24 million by the City regulator the Financial Conduct Authority (FCA) for failing to properly protect client assets.

The FCA said the fine, reduced from £11.78 million because Aviva agreed to settle at an early stage, relates to failings in oversight of outsourced providers and the protection of client assets between January 2013 and September 2015, in breach of Client Assets Sourcebook (CASS) rules.

During the period Aviva, “failed to put in place appropriate controls over Third Party Administrators (TPAs) to which they had outsourced the administration of client money and external reconciliations in relation to custody assets”.

The FCA said Aviva also failed to “sufficiently challenge” the performance and resources of TPAs and follow up on risk and compliance problems linked to the TPAs because it did not provide enough resources and technical expertise to enforce CASS rules.

The FCA also uncovered failings in Aviva’s internal reconciliation process, which resulted in the under and over-segregation of client money, and in the period February 10, 2014 to February 9, 2015 under-segregation peaked at £74.4 million.

Mark Steward, director of enforcement and market oversight at the FCA, said: “Aviva outsourced the administration of client money and external reconciliations in relation to custody assets, but failed to ensure that it had adequate controls and oversight arrangements to effectively control these outsourced activities.

“With outsourced arrangements firms remain fully responsible for compliance with our CASS rules.

“Firms are reminded that regulated activities can be delegated but not abdicated.

“Other firms with similar outsourcing arrangements should take this as a warning that there is no excuse for not having robust controls and oversight systems in place to ensure their processes comply with our rules when CASS functions are outsourced.

“This is the first CASS case in relation to oversight failures of outsourcing arrangements and we will continue to take action against firms that fall short of our CASS Rules.”

Andy Briggs, chief executive of Aviva UK Life, said: “We fully accept the findings of the FCA’s review.

“This should not have happened and we are sorry.

“Aviva’s customers have not suffered any loss and there has been no impact on advisers.

“We have addressed and resolved the issues identified.

“We have made improvements to ensure we have clear oversight of the processes undertaken on the adviser platform, and remain vigilant in our continued monitoring through a dedicated and expert team.”

Article source: http://www.dailyrecord.co.uk/business/business-news/aviva-fined-824m-outsourcing-failures-8983169

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>