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The bank has systemically overcharged clients without their nor management’s knowledge
UK’s financial regulator FCA has issued a press release detailing the wrongdoings of State Street UK and mandated the company to pay a hefty £23 million fine. According to the UK watchdog, State Street UK’s Transitions Management has systemically marked up fees on certain transactions without its clients having previously agreed to the fee structure.
State Street Bank Europe Limited and State streeet Global Markets International Limited that together are presented by State Street UK have agreed to settle at an early stage of the inveastigation and are receiving a discount of 30% to their financial penalty. Without the discount the fine would have totaled more than £32 million.
The unit named State Street UK’s Transition Management had devised a deliberate strategy to overcharge its clients and the wrongdoing was completely concealed from their statements. According to the Authority’s director of enforcement and financial crime Tracey McDermott the findings made public are just another example of how certain companies have disregarded their clients’ interests.
In the period between June 2010 and September 2011 the FCA has found out that the company has overcharged six of its clients for a total of £20,169,603. Obviously clients were part of State Street UK’s investment management clients or pension funds. The misconduct was identified only after one of the clients complained that he found out about mark-ups on certain trades that we’re not agreed to.
The individuals responsible for the overcharging have claimed to the client and to the firm’s compliance department that the charge was just an error, when in fact they already knew that there was a structure in place that marked up trades on other client accounts. According to the FCA State Street UK has breached its position of trust and failed to treat its customers fairly.
The revenues from the mark-ups have accounted for a quarter of Transitions Management’s revenues. Once senior management became aware and got involved to investigate the wrongdoings it took action to improve business controls, governance and culture across its UK business.
For the full press release visit FCA’s website.