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The Monetary Authority of Singapore has today issued a $30,000 administrative penalty to British private bank and wealth manager Coutts & Co for conducting business via an unregulated fund manager in Singapore as per rules set forth by Singapore’s Securities and Futures Act (SFA).
LeapRate spoke to a representative at Coutts & Co, who explained that “This particular representative wasn’t an unregulated introducer. He simply didn’t have the required authorization to carry on business in the regulated activity of fund management. There was a contravention of the law because the said representative carried on business in the regulated activity of fund management, although he was not an appointed representative or provisional representative or temporary representative in respect of that type of regulated activity.”
According to the report by the Monetary Authority of Singapore, Coutts’ Singapore division has contravened section 99B(3)(a) of the SFA as it allowed one of its representatives to carry on business in the regulated activity of fund management from 19 March 2013 to 26 July 2013 when he was not an appointed representative, provisional representative or temporary representative in respect of that type of regulated activity.
Coutts & Co, which was the high net worth private banking and fund management division of British bank NatWest became part of the Royal Bank of Scotland Group as part of the acquisition of NatWest.
Whilst this measure represents a relatively small administrative penalty, it is not the first time that Coutts & Co has been the subject of regulatory censuring. In November 2011, the Financial Services Authority (FSA) fined Coutts £6.3m for mis-selling the American International Group (AIG) Enhanced Variable Rate Fund between December 2003 and September 2008.
At that time, the FSA forced Coutts to compensate all customers who suffered a loss as a result of its failings in selling the AIG Life Premier Bonds. A significant proportion of the fund’s assets were invested in riskier asset-backed securities. A run was started on the fund following the late-2000s financial crisis.
Coutts customers still had £748 million invested in the fund when it was suspended in September 2008, but were only allowed to withdraw half of their investment. Many transferred the remaining 50 per cent to a non-interest bearing recovery fund until July 2012. The FSA concluded that Coutts failed in its responsibilities by giving advisers inadequate training around the risks of the product. Coutts recommended the fund to some customers even though it might have exposed them to more capital risk than they were willing to accept and many customers were advised to invest too large a proportion of their overall assets in the fund.
As with many cases handled by the FSA – latterly the Financial Conduct Authority – Coutts agreed to settle at an early stage in exchange for a 30% discount on its fine, otherwise the fine would have been £9 million.
For the official ruling by the Monetary Authority of Singapore, click here.