The UK's Financial Conduct Authority has fined Aviva Pension Trustees UK Ltd and Aviva Wrap UK Ltd for failing to keep an eye on companies that should have been helping it protect the assets of its clients.

The fine relates to breaches of the FCA's Client Assets Sourcebook (CASS) rules whose purpose is to protect 'client money' and custody assets if a firm becomes insolvent. Aviva outsourced the administration of client money and external reconciliations in relation to custody assets, but failed to oversee and control them properly. This is the first CASS-related case to do with outsourcing arrangements.

The FCA, as usual, lopped 30% off the original fine in recognition of the firm's co-operation. Its findings stem from a seemingly routine visit that staff from its CASS department paid to the firms in February last year. Not only did they uncover current transgressions; the visitors spotted some problems when reading CASS audit reports from years gone by.

The misconduct happened between January 2013 and September 2015, with the firm breaching the FCA's 'principle for business' 3 (Management and Control) and 10 (Clients’ Assets) and some rules in Chapter 8 (Outsourcing) of the Senior Management Arrangements, Systems and Controls sourcebook (SYSC), along with the the CASS rules.

The firms mislabelled transactions when performing client money calculations (thereby breaking CASS 7.6.2R and CASS 7.15.3R); they failed to submit accurate client money and asset returns (CMARs) (thereby falling foul of SUP 16.14.3(R)(1)); they did not 'segregate' client money properly; and they held inadequate CASS resolution packs or CASS RPs (thereby breaching CASS 10.1.3R).