Deloitte is fined record £750,000

DELOITTE & Touche was hit with a humiliating £750,000 fine today for serious failings in its private client investment division. The penalty from the Financial Services Authority is three times bigger than any other fine meted out to an independent financial adviser.

The FSA came close to shutting down the wholly-owned Deloitte business, Deloitte & Touche Wealth Management, so serious were its compliance failings. The affair is doubly embarrassing for Deloitte because it has a large financial services practice that advises life assurers and IFAs on regulatory compliance.

At the same time that it was advising corporate clients on the best way to undertake reviews into possible pension mis-selling, its own IFA was 54 months late with phase one of the review and 12 months late with phase two, the FSA said.

FSA director of enforcement Andrew Procter said: 'DTWM's failings were so serious that had it not been for decisive action taken to improve standards...we would have considered preventing the firm conducting investment business.' Good compliance was essential to consumer protection, he added.

The failings took place between 1997 and 2001. The entire old managementof DTWM, formerly called Touche Ross Financial Services and then Deloitte & Touche Private Clients, was swept away in 2002 once the parent firm became aware of the shortcomings.

In a 36-page catalogue of criticisms, the FSA took the firm to task for 'systemic and prolonged' failings in its compliance arrangements and a 'wholly unacceptable' attitude among senior management.

Record-keeping was so 'inadequate' that it was unable to ascertain whether or not past advice to clients had been suitable.

It also lambasted the company for applying for FSA approval for an employee whom a senior manager knew had previously expressed his intention to pursue a course that might have misled regulators.

At its biggest in 1999, DTWM advised about 1,200 wealthy individuals on tax avoidance, use of trusts and investment. It had 12 branches, the two biggest in London and Cambridge.

Deloitte today admitted the failings, which it said it very much regretted. Swift remedial action was taken once the issue was identified, it said. Wronged clients were being compensated. Deloitte counts Royal Bank of Scotland, Abbey National and Alliance & Leicester among its clients.

Until today, the biggest penalty against an IFA was a £250,000 fine on St James's Place Capital last September for compliance failings.