We have a few clients with their portfolios on the Transact platform, and if you are one of them we will be writing to you separately.
It does appear that the problem has been resolved, and no client has suffered detriment or loss as a result of the breaches identified by the FSA, which have resulted in a fine of £3.5m.
The FSA found that Transact had segregated client money appropriately, but had failed to prevent temporary shortfalls as a result of trading activities. For example, when funds are allocated to buy investments for a client, the cash may not be immediately available because it is waiting for an equivalent sell trade to settle, or for a cheque to clear. Corporate money should be put into the client pool to fund temporary shortfalls of this type, rather than just letting them unwind in the normal course of operations. This has now been corrected.
In addition, there was an issue with some of the client money bank accounts, which must be segregated from corporate money and held in trust. In two client money bank accounts the trust documents did not conform to the required wording.
Transact have changed and upgraded their procedures, and BDO LLP has reported to the FSA on their implementation. No clients have suffered loss or detriment, and Transact assure us that the problem is fixed. Last year Transact won 6 quality awards, and this year they have won another 8.
While it is worrying to learn that Transact breached the rules over a significant period of time, it does appear that they have sorted it out and so we feel there is no need to take any action to move portfolios away from them. Indeed, they seem more determined than ever to provide excellent service.
