21 Dec 2017 | 12.13 pm
Central Bank Fines BCP Asset Management
BCP sanctioned for undue reliance on clients self-certifying their status
21 Dec 2017 | 12.13 pm
Investment company BCP Asset Management has been fined €210,000 by the Central Bank following an investigation which found “significant failures” which resulted in some clients being denied “the level of investor protection appropriate to their status as a retail client”.
The CBI statewd that BCP’s fine arises from the company’s failure to properly categorise clients under the ‘Conduct of Business’ rules under MiFID regulations. The firm admitted the breaches, for which the Central Bank also issued a formal reprimand.
The Central Bank said: “An enforcement investigation identified significant failures by the firm in respect of client categorisation under the Conduct of Business Rules. As a result of the breaches, certain clients were not afforded the level of investor protection appropriate to their status as a retail client. The three breaches identified relate to:
- Failure to carry out adequate assessments of eight retail clients who elected to be treated as professional clients;
- Failure to take all reasonable steps to ensure that elective professional clients met the quantitative test set out in the MiFID Regulations; and
- Failure to have in place adequate policies and procedures for client categorisation.”
The first two breaches commenced on dates between July 2013 and December 2013 when the clients were opted up as professional clients, and persisted for in excess of four years until full remediation was completed by BCP on 1 December last. The third breach occurred for a two year period between July 2013 to June 2015.
Head of investigations Brenda O’Neill said: “Investment firms owe a duty of care to their clients and must place their interests at the heart of everything they do. Any failure by a firm to protect those interests is unacceptable.
“Miscategorisation of retail clients as professional clients can have very serious impacts, including a client being exposed to elevated levels of investment risk and a loss of eligibility to investor compensation. Investor protections cannot be waived by a retail client on an elective basis unless the firm has discharged its strict client categorisation obligations set out in the MiFID Conduct of Business Rules.
“When opting up certain of its clients, the firm placed undue reliance on clients self-certifying their status and too much weight on the fact that standard form documentation was transmitted to it by investment intermediaries. The firm failed to gather sufficient supporting documentation to enable it to perform the due diligence required of it.
“It was incumbent on the firm, before accepting their waiver of investor protections, to take reasonable steps to satisfy itself that the relevant clients were capable of making their own investment decisions and understood the risks involved. The firm failed to take those steps.”