Sapia to pay £19.6m to WealthTek clients

Sapia has agreed to pay £19.6m to clients of failed wealth management firm, WealthTek.

The AI platform has also been censured by the Financial Conduct Authority (FCA) following an investigation by the regulator.

WealthTek was an FCA-regulated wealth manager from January 2020 until April 2023, when the regulator appointed special administrators and ordered the firm to cease operations.

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’s investigation found that Sapia did not put enough safeguards in place to protect this money, with the company admitting 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. The regulator said this lack of separation increased the risk that client money could be lost because of, for example, misuse or poor management.

Joint executive director of enforcement and market oversight at the FCA, Therese Chambers, 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.”

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

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.

---