Civil Penalty Licence Restriction - Colonial Pension Services (2019-02-27)

Summary

This is a Bermuda Monetary Authority press release announcing that it imposed a civil penalty of $200,000 on Colonial Pension Services Ltd., a company licensed under the Investment Business Act 2003, for breaching a condition of its licence and for multiple breaches of the Investment Business (Client Money) Regulations 2004. It is an enforcement notice describing past conduct and the resulting fine, not a new rule of general application.

• Licence condition breach: Between November 2015 and December 2017 the Company held client assets despite a licence condition prohibiting it from holding client assets, managing investments, or safeguarding or administering investments.
• Client money regulation breaches: The Company failed to pay all client money into a client bank account, failed to keep client money separate from its own money, and failed to pay out client money as soon as possible or by the next business day as required.
• Penalty and process: The Authority imposed a $200,000 civil penalty after a statutory enforcement process; the Company waived its right to appeal and had engaged an independent accounting firm to review and remediate its compliance failures.

The notice serves as a public record of enforcement action and a reminder to other Investment Business Act licensees of the standards expected regarding licence conditions and client money handling; it does not itself create new ongoing obligations beyond those already set out in the Act and the 2004 Regulations.

Key obligations

• Investment business licensees must comply with all terms and conditions of their licence, including any restrictions on holding client assets or managing/safeguarding investments.
• Investment providers must pay all client money they hold or receive into a client bank account.
• Investment providers must keep client money separate from their own money.
• Where an investment provider holds client money, it must pay it out as soon as possible and no later than the next business day.

Applies to

investment business licensees under the Investment Business Act 2003, investment providers, Colonial Pension Services Ltd.