By PAUL O’DONOGHUE, Senior Correspondent
CACEIS UK, an asset servicing bank, will make a £31.7 million voluntary payment to WealthTek clients after failings that left customers exposed to financial crime risk.
The FCA (Financial Conduct Authority), the UK’s financial watchdog, said that CACEIS failed to act on clear warning signs linked to WealthTek’s authorisation status and client asset controls.
“The FCA has now secured over £57 million in total for WealthTek clients in just over a year, with action taken against CACEIS UK, Sapia Partners and Barclays Bank UK,” it said.
WealthTek, a UK-based wealth management firm, collapsed in April 2023 after a major FCA investigation revealed massive client fund shortfalls of approximately £81.4 million.
The watchdog has pursued other financial institutions tied to WealthTek for a lack of oversight.
CACEIS UK became WealthTek’s sub-custodian in November 2020. In that role, it was responsible for safeguarding client assets.
CACEIS UK and WealthTek
The FCA said the firm checked the Financial Services Register on three occasions. These checks showed WealthTek was not authorised to hold certain client assets. However, it did not take sufficient action.
“The voluntary payment will be distributed to WealthTek clients who have not been able to reclaim their money in full,” the FCA said.
Despite the warning signs, CACEIS UK opened client accounts for WealthTek. It also failed to identify that WealthTek was not permitted to hold client money. The FCA said the firm did not properly monitor the accounts or resolve system alerts in a timely manner.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “Strong financial crime controls keep clients’ assets safe. CACEIS UK’s failures exposed clients to serious risk.”
She added: “The firm chose to do the right thing with extensive co-operation and agreeing to a substantial voluntary payment. We decided not to impose a fine as a result.”
The FCA regulated WealthTek LLP was regulated from 28 January 2020 until 4 April 2023. In April 2023, the FCA took action to order the firm to cease operations and to appoint Special Administrators. Clients can see updates from WealthTek’s administrators [HERE].
The FCA said the payment, alongside contributions from other firms, will help address shortfalls for affected clients. It has now taken action against CACEIS UK, Sapia Partners and Barclays Bank UK in relation to the WealthTek case.
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