| Link(s): | FCA censures auditor for failings in client asset reports | FCA Final Notice 2024: Macintyre Hudson LLP (fca.org.uk) |
Context
In an unprecedented, ‘first of its kind’ action, the FCA has censured the auditor Macintyre Hudson LLP (MHA) for failing to prepare client assets reports to the required standard. MHA failed to notify the FCA of rule breaches by firms it had audited, which could have put customers’ money at risk.
Key points to note and next actions
- The FCA’s investigation found that, between 2015 and 2019, MHA failed to prepare 4 client assets reports (relating to 2 firms) to the required standard (contravening SUP 3.10.4A R (1)). It failed to report a total of 25 breaches of the rules by the two firms in question. These ranged from failings in documentation, to firm’s assets being held alongside client assets.
- The FCA considered MHA’s failings to be serious, however the impact on consumers from the unreported breaches would not have resulted in significant harm in the event of firm failure. Therefore, it is appropriate to issue a public censure in this case.
- The firms where the underlying unreported breaches occurred were subject to additional regulatory action.
- Although relating to CASS 6 and CASS 7 failings, the nature of the breaches are similar to common issues we see when working with firms in relation to how they hold insurance client money.
This underlines the importance of having audits conducted by an audit firm which understands the FCA’s requirements, both for client money and of auditors.