Partner Article

J.P. Morgan fined £3m for persistent failings

J.P. Morgan International Bank (JPMIB) has been fined just over £3m for persistent systems and controls failings over a two year period.

The £3, 076,200 fine was enforced by the Financial Conduct Authority (FCA), who said failings related to the way JPMIB provided retail investment advice and portfolio investment service.

Insufficiencies persisted for two years at the bank, and were not rectified until the FCA brought them to their attention.

A number of issues were found with JPMIB processes, while the bank persistently showed an inability to show client suitability from its client files.

These failings were brought to the bank’s attention in the FCA’s thematic review into wealth management firms and the suitability of advice given.

Over the two year period, JPMIB’s senior management did not have sufficient information and monitoring systems to identify and deal with the issues raised by FCA.

FCA said client files were not regularly updated and did not contain the necessary client suitability information, while computer records did not allow for sufficient data to be retained.

Suitability reports failed to adequately contain client demands and needs, nor did they explain why investment was suitable to meet client needs or flag up disadvantages of investment.

FCA added that communications were not always sent to the client to confirm their suitability, which is a prerequisite of JPMIB’s own policy.

Furthermore, the bank did not carry out sufficient risk and compliance assesments, and despite some issues being identified by monitoring, they were not addressed until February 2012.

Tracey McDermott, director of enforcement and financial crime, said: “No matter who they are, customers of wealth managers should be able to expect the firm to keep complete, up to date client records so that they can give the right advice.

“In this case the firm did not have complete records, nor did its management have the information they needed to recognize this.

“Firms which fail to keep the right records expose their clients to the risk of inappropriate investments and have no way of checking whether their advice has been appropriate.”

This was posted in Bdaily's Members' News section by Miranda Dobson .