The firm was handed the fine by the Financial Services Authority for offering the wrong investments to nearly a quarter of its clients, despite former management knowing about the breaches for 22 months and doing nothing.
Its parent company, Aim-listed Ashcourt Rowan, yesterday said the failings were a “legacy issue” and would pay a £590,000 fine early, cutting the fine imposed by 30 per cent.
The firm is also paying £1.5m in costs to fund a programme aimed at tackling compliance issues, contributing to £2m of total exceptional costs.
Chief executive Jonathan Polin, who took charge in September 2011 and identified the problem, warned that more wealth managers would face similar fines.
“Savoy is the first firm to be penalised for this but it is, in my view, highly likely that others will follow,” Polin said. It is understood around six key figures at Savoy no longer work at the firm.
Ashcourt said the fine had contributed to its Ebitda loss of £400,000 for the six months ending 30 September and predicted it would have posted a profit without the FSA fine.
Despite the problems, analysts and markets were upbeat about the firm’s prospects. Canaccord Genuity analyst Michael O’Brien said the firm was going through a “rehabilitation” and was now a less speculative “buy”.