Release Date: 28th April 2014

To access the original FCA document, click here.

Summary

Invesco Perpetual, comprising Invesco Asset Management Limited and Invesco Fund Managers Limited, was fined £18.6 million by the Financial Conduct Authority (FCA) for not adhering to investment limits intended to manage risk for investors. These violations, which occurred between May 2008 and November 2012, resulted in losses of £5 million for which investors were promptly compensated. The fine could have been higher, reaching £26.63 million, but was reduced due to Invesco’s early agreement to settle.

The FCA’s investigation revealed that Invesco Perpetual breached investment rules designed to limit exposure to risk on 33 occasions across 15 funds, representing over 70% of their assets under management. Furthermore, the firm failed to clearly communicate to investors about the risks associated with the use of derivatives, which introduced leverage into the funds. This lack of transparency and inadequate descriptions in key investor documents did not align with the firm’s obligation to ensure communications were clear, fair, and not misleading.

Additionally, Invesco Perpetual was found to have inaccuracies in trade recording, which risked incorrect fund pricing, and there was insufficient monitoring to ensure fair trade allocation among funds. Such oversights could disadvantage some funds over others, increasing the risk to investors.

The FCA highlighted that its proactive measures were aimed at protecting consumers by addressing potential risks before significant damages occurred. This case serves as a crucial reminder to other firms of the importance of adhering to FCA regulations, particularly in terms of risk management, transparent communication with investors, and the implementation of robust systems and controls to safeguard investor interests.