Invesco Perpetual in receipt of hefty fiscal penalty as a result of the FCA having concluded that it did not comply with investment limits over 3 and a half year period Britain’s largest retail investment management firm, Invesco Perpetual, has been issued a substantial fiscal penalty by the Financial Conduct Authority (FCA) as a result of the UK financial markets regulator having deemed the company’s method of protecting customers from exposure to risk to be insufficient, resulting in losses to investors. Between May 2008 and November 2012, Invesco Perpetual did not comply with investment limits which are designed to protect consumers by limiting their exposure to risk. The extent of these losses was £5 million and prompt compensation has been paid to the funds. These losses could, however, have been greater. In addition, the firm did not clearly inform investors or explain the associated risks of its use of derivatives which introduced leverage into the funds, although the firm was allowed to use derivatives in this way. Invesco Perpetual acted quickly to improve its systems and controls and to remediate the issues identified by the FCA. “As a forward looking regulator the FCA takes action where we see risks to consumers, not just after they suffer losses. In this case investors of all sizes trusted Invesco Perpetual to manage their money. They signed up for a certain level of risk but we found Invesco Perpetual’s actions were at odds with investors’ reasonable expectations.” Invesco Perpetual is the largest retail investment manager in the UK. Investors place approximately £47 billion in Invesco Perpetual branded funds, much of which is invested by retail consumers. The FCA found that Invesco Perpetual broke the FCA’s rules designed to limit the risks to investors on 33 occasions. These breaches occurred across 15 of the Invesco Perpetual branded range of funds which represented more than 70% of the assets under management did not communicate clearly or fairly with its investors because it failed to disclose the use of derivatives in the relevant simplified prospectuses, and incorrectly described the impact of using derivatives in the key investor information documents produced in 2012. Additionally, the FCA has confirmed that Invesco Perpetual failed to record trades on time, which meant the funds could have been wrongly priced; and failed to monitor whether trades were allocated fairly between funds, creating a risk that some funds may have been disadvantaged. The FCA has an objective to ensure that consumers are appropriately protected, howevder Invesco Perpetual agreed to settle at an early stage, qualifying for 30% discount to their fine. Without this, the fine would have been £26,632,900. For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.
Britain’s largest fund manager fined £18.6 million for adverse risk exposure to investors
