The UK Financial Conduct Authority (FCA) today announced it imposed a censure on Sapia. The firm has agreed to make a voluntary payment of £19,637,950 to WealthTek clients.

Sapia began working with WealthTek in 2013 and later appointed it as one of its appointed representatives. This resulted in Sapia holding and being responsible for protecting client money resulting from WealthTek’s activities.

The FCA found Sapia did not put enough safeguards in place to protect this money.

Sapia has admitted that it failed to properly separate key roles within its business relating to client money. People who could make payments from client money accounts also carried out the checks of those accounts required by FCA rules. This lack of separation increased the risk that client money could be lost because of, for example, misuse or poor management.

The voluntary payment will be distributed to WealthTek clients who have a shortfall in the money they have been able to reclaim.

In December 2024, the FCA, separately, charged WealthTek’s principal partner with multiple criminal offences, including money laundering and fraud.

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said:

‘Poor safeguards around client money create opportunities that bad actors can exploit. Sapia’s failures exposed clients to an unacceptable risk of losing their money.

‘We decided not to impose a fine on Sapia because of its exemplary cooperation and its acceptance that it should make a voluntary payment to affected customers.’

WealthTek LLP was an appointed representative of Sapia from 2017 until becoming directly authorised by the FCA from 28 January 2020 until 4 April 2023 when the FCA took action to order the firm to cease operations and to appoint Special Administrators.

Were it not for Sapia’s agreement to make the voluntary payment of £19.6m (with the assistance of its ultimate parent company), to be distributed to WealthTek’s clients with a shortfall in the money they have been able to reclaim, and Sapia’s cooperation throughout the investigation, the FCA would have imposed on Sapia a penalty of £7,412,000 (after the 30% discount for agreeing to settle the matter).

Of the £19.6m, WealthTek’s administrators will receive £19.1m and the Financial Services Compensation Scheme (FSCS) will receive £500,000 (in accordance with its statutory duties to pursue recoveries where reasonably possible and cost effective).

Once FSCS has concluded any further recoveries actions, it will proceed to make distributions of any surplus to WealthTek’s FSCS eligible clients under the rules set out in the Compensation Sourcebook of the FCA’s Handbook.