The UK's Financial Conduct Authority (FCA) has placed restrictions on wealth and retail investment management firm CFS Management (CFS) for failing to ensure that client money is held in a separate account to firm money.
The FCA has said that CFS, a London-based wealth manager and retail investment broker, must not accept any new client money or new custody assets, whether from existing or new clients, in any of its business areas.
In its notice, published last week (April 20), the FCA outlined its concerns about CFS' business and its compliance with the FCA's Principles for Businesses and the Client Assets Sourcebook rules.
The regulator said CFS recognised that firm money and client money may be held in the same accounts.
CFS was told by the FCA in March that it must follow a list of instructions, including the order not to diminish the value of its assets in any way without written consent.
The FCA also said that CFS failed to acquire appropriate acknowledgment letters for client bank accounts where client money is held.
It first brought up its concerns regarding CFS in March 2022, but in its supervisory notice dated 16 March 2023, it said the firm failed to appropriately remediate the failings identified.
As of 7 March 2023, the firm had 91 active clients, to whom it provides execution-only services. Of the 91 clients, 45 are individuals and 46 and corporate entities.
The firm's client money has reduced significantly since the start of this year, dropping from £13.8m in January to under £1m in March.
