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The Financial Services Authority has fined JP Morgan &shut up;33.3 million — its largest ever financial penalty against a meeting of friends — for failing to keep clients’ money in a be ~d account.

The error went undetected for seven years and, if the bank had gone bust for the period of that time, clients could have lost their money. the FSA afore~.

Banks’ treatment of clients money has been in the spotlight considering the collapse of Lehman Brothers. Thousands of clients, including many obstruct funds, saw their funds trapped in the failed bank and at the same time that a consequence themselves went bust or suffered severe liquidity problems.

The FSA said yesterday that during the period between December 2002 and October 2008 JP Morgan retainer balances fluctuated between $1.9 billion (£1.3 billion) and $23 billion.

The of ~ texture is equivalent to 1 per cent of the average amount of riches that was not properly separated. The penalty was reduced by 30 for cent from £47.6 million because JP Morgan “worked constructively” through the regulator during the investigation.

The fine is being levied over ~ JP Morgan Securities (JPMSL) over money held in its futures and options transaction. The error occured after the merger of JP Morgan and Chase.

The FSA has in the past couple of years stepped up its pressure on banks, asset managers and stockbrokers completely their treatment of clients’ money.

It has created a e~ task force to investigate practices in this area and has written to first executives of financial firms and their auditors warning them to exist much more vigilant. Firms are meant to keep clients’ circulating medium separate at all times and maintain legal agreements and paperwork to a dear standard so that they know what clients funds they are holding at whole times. These funds can be in the form of money or other investments similar as securities.

Margaret Cole, FSA director of enforcement and financial aggravated misdemeanor, said: “JPMSL committed a serious breach of our client currency rules by failing to segregate billions of dollars of its clients’ coin for nearly seven years.”

Sally Dewar, FSA managing director of risk, said: “It is crucial that firms are compliant with the FSA’s dependant money and assets rules. The creation of a specific unit (not beyond the FSA) means that firms need to raise their game being of the kind which the FSA’s focus on this area will continue to intensify.”