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A British offshoot of Crédit Agricole has agreed to pay almost £32mn to compensate customers of collapsed wealth management company WealthTek, in an agreement to end an investigation into its failure to prevent alleged fraud.
The Financial Conduct Authority said it accepted a voluntary payment from CACEIS UK, the asset-servicing arm of the French bank, instead of levying a fine. The firm had been the sub-custodian bank responsible for keeping the assets of WealthTek clients safe before it was hit by fraud allegations.
WealthTek fell into administration in 2023 and its founder John Dance is facing nine criminal charges by the FCA, including multiple counts of fraud and money laundering in a case the watchdog has called “one of the most serious and largest frauds we have ever investigated”.
The FCA accused Dance of using £64mn of client funds taken from his wealth management firm from 2014 to 2023 to finance the purchase of prizewinning racehorses and a Newcastle nightclub. He pleaded not guilty to the charges and a trial has been set for September 2027. He is subject to a restraining order to preserve his assets for potential future confiscation pending the outcome.
CACEIS UK ignored warnings on the FCA’s register that WealthTek was not authorised to hold client funds and then did not monitor the accounts properly or deal with alerts raised about them by its own systems, according to the watchdog.
Crédit Agricole said CACEIS UK was “fully committed to fraud prevention” and the FCA had reviewed all its procedures following its acquisition of RBC’s UK asset servicing business in 2023 and had not requested any “specific remediation plan”.
The £31.7mn payment by the bank will mostly be distributed to WealthTek clients who have not been able to recoup their money in full. The FCA said that if CACEIS had not offered the payment it would have fined it £23.1mn after a 30 per cent discount for agreeing to settle.
It takes the total amount of compensation to be paid to WealthTek customers above £57mn. Last year, Barclays agreed to make a similar payment of £6.3mn for its role in opening a client account for the wealth manager. Then Sapia Partners, which allowed WeathTek to trade as its appointed representative before it gained its own licence in 2020, paid £19.6mn this year.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “Strong financial crime controls keep clients’ assets safe. CACEIS UK’s failures exposed clients to serious risk.” She added that the bank had “done the right thing” by co-operating and making the “substantial voluntary payment”.
The FCA previously estimated that 84 per cent of the clients of WealthTek, which previously traded as Vertus Asset Management and Malloch Melville, would be fully compensated.
