Abbey National Asset Managers Ltd fined £320,000 for SYSC breaches

Inappropriate systems and controls (Rule 3.2.6 SYSC) between December 2001 and January 2003 and failure to observe Principle 2, that “A firm must conduct its business with due skill, care and diligence” cost Abbey National Asset Managers Ltd (ANAM) a £320,000 fine in December. Its divisional compliance function started a Risk Mitigation Programme (RMP) project for ANAM in July 2002 but criticised the unit for not meeting project deadlines and for the low quality of work completed. Process and controls documentation was delayed by three months and further concerns about systems and controls on the fund management desks were not resolved fully for nine months. Compliance monitoring staff levels at Abbey National’s Life Division, which included ANAM, were 40% below the target of five, from about March 2002 to June 2003 and management information at ANAM was insufficient to enable it to “identify, manage and control risks of regulatory concern” between 1 December 2001 and June 2003. In December 2002 Life Division Compliance, in a review of the Far Eastern Desk, discovered: out of date and inadequate dealing procedures; in a sample of 18 trades four (23%) were only entered into the computerised dealing system after execution; trading had been conducted outside the normal controlled environment; and that the introduction of exception reporting would produce a benefit straight away. A subsequent more detailed examination revealed that some clients were favoured over others and allocations had been altered post-execution, as well as major SYSC failings. Client funds were compensated to the order of £300,000 in total.