Aviva fined $10.5 million by UK FCA over outsourcing
- The confusion over rural electrification in India
- One year on, it’s finally all about the ‘software’, Chandra
- N. Chandrasekaran set to focus on new businesses in smart mobility, cities
- N. Chandrasekaran completes one year as Tata Sons chairman, stabilizes group
- Banks vulnerable to hackers without online interface between CBS, SWIFT
London: Aviva Plc was fined £8.2 million ($10.5 million) by the UK markets regulator for failures related to its use of outsourcing, the second penalty for the insurer from the watchdog in two years.
The Financial Conduct Authority (FCA) said on Wednesday Aviva had failed to properly oversee third parties used for administrative tasks involving client money and the reconciliation of client assets between January 2013 and September 2015. As a result, customers’ money wasn’t always separated correctly, with deficits of as much as £74.4 million at its worst.
The penalty is the latest for Aviva from the FCA after the insurer was fined £17.6 million in 2015 for failing to manage conflicts of interest among funds in its fixed-income business. The company also paid £132 million in compensation to clients related to the same issue in 2014.
“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,” Mark Steward, FCA director of enforcement and market oversight, said in a statement. “Firms are reminded that regulated activities can be delegated but not abdicated.”
The FCA said while the issue was serious, there was no loss of client money. The company received a 30% discount on a proposed £11.8 million fine for settling the matter at an early stage. It’s the first penalty the watchdog has issued under its Client Assets Sourcebook, or CASS, rules in relation to oversight of third parties.
“This should not have happened and we are sorry,” Andy Briggs, chief executive officer of Aviva UK Life, said in a statement. “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.” Bloomberg