FSA fine of £8 million for systems and controls breaches
The FSA has fined UBS AG (UBS) £8 million (including a 20% discount) for systems and controls failures in its international wealth management business. The inadequacies in systems and controls meant that UBS was not able to prevent or detect multiple unauthorised transactions using client money conducted by 4 employees between January 2006 and December 2007.

The FSA found breaches of Principles 2 and 3. In particular, the FSA found that UBS failed to:

manage and control the key risks, and the level of risk, created by its international wealth management business model;
implement effective remedial measures in response to several warning signs that suggested the business’ systems and controls were inadequate; and
provide an appropriate level of supervision over customer-facing employees.
The FSA made no criticism of UBS’s domestic wealth management business. UBS has made redress to affected customers and made changes to its systems and controls since these incidents.

This final notice demonstrates the FSA’s increased focus on firms’ systems and controls and the size of the financial penalty is consistent with the FSA’s insistence on imposing higher financial penalties to act as a deterrent to misconduct.