The Financial Conduct Authority (FCA) has said it’s fined Invesco Perpetual £18.6m for failings in fund management.
The country’s largest investment manager exposed investors to a greater level of risk than they’d been led to expect, the regulator said, and, between May 2008 and November 2012, it failed to comply with investment limbs designed to protect consumers by limiting exposure.
The FCA also found that the firm didn’t sufficiently explain the risks associated with its use of derivatives, which introduces leverage into the funds. It was allowed to use them in this way, however.
Losses came to £5m, and compensation was paid. Invesco Perpetual acted quickly to improve systems and controls, the FCA confirmed.
Invesco Perpetual agreed to settle at an early stage, qualifying for 30 per cent discount to their fine. Without this, the hit would have been £26.6m.
Tracey McDermott, FCA director of enforcement and financial crime, said:
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.
Predominantly retail consumers, investors place around £47bn in Invesco Perpetual branded funds.