CACEIS UK to make £31.7 million payment after FCA censure over WealthTek control failures

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CACEIS UK £31.7m FCA payout

Highlights

CACEIS UK will make a voluntary payment of £31.7 million to WealthTek clients following FCA censure for inadequate controls that exposed clients to financial crime risk.
The FCA reported that, as sub-custodian since November 2020, CACEIS UK failed to act on WealthTek's unauthorised status, improperly opened and monitored client accounts, and missed system alerts.
Recent FCA actions involving CACEIS UK, Sapia Partners, and Barclays Bank UK have secured over £57 million for WealthTek clients in just over one year, with the investigation concluding in 13 months.

Regulatory findings and payment terms

As reported by the Financial Conduct Authority, CACEIS UK has been censured and will make a voluntary payment of £31.7 million to WealthTek clients after failing to act on information that left them exposed to the risk of financial crime.

CACEIS UK, an asset servicing bank, became WealthTek's sub-custodian in November 2020, when the firm was still known as Vertus Asset Management LLP. In that role, it was responsible for keeping client assets safe.

On three occasions, CACEIS UK checked the Financial Services Register, which showed that WealthTek was not authorised to hold certain client assets, but the bank did not take sufficient action. The FCA also says the firm did not identify that WealthTek was not allowed to hold client money, yet it opened client accounts for WealthTek's use and then failed to monitor those accounts properly by not promptly reviewing and resolving system alerts.

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, says strong financial crime controls keep clients' assets safe and that CACEIS UK's failures exposed clients to serious risk. She says the firm extensively co-operated and agreed to a substantial voluntary payment, which led the regulator to decide not to impose a fine.

Broader recovery for WealthTek clients

The voluntary payment is due to be distributed to WealthTek clients who have not been able to reclaim their money in full. The FCA says its action involving CACEIS UK, Sapia Partners and Barclays Bank UK has now secured more than £57 million in total for WealthTek clients in a little over a year.

The regulator also says it concluded its investigation in 13 months, presenting the case as an example of efforts to improve the pace of enforcement work. The outcome highlights continued scrutiny of custody, account monitoring and financial crime controls across the UK financial services sector.

Our earlier report on Barclays Bank UK PLC’s mortgage covered bonds explained why the programme retained its top-tier ‘AAA’ rating with a Stable Outlook after a periodic review. We noted that the assessment was supported by over-collateralisation, liquidity features and the UK covered bond framework, alongside the quality and diversification of the underlying residential mortgage cover pool.

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