UBS has been fined £8m by the Financial Services Authority (FSA) after allowing staff to make thousands of unauthorised trades using clients money and then hiding the losses, The Times reports.

An FSA investigation discovered four private bankers in the UBS London office had traded precious metals and foreign exchange illegitimately, making up to 50 rogue trades a day during a two year period.

UBS would not comment on how much money had been lost, but said that it paid clients £36m in compensation.

The FSA said UBS missed the warning signs. It also accused the bank of allowing client advisers to book trades without an independent check.

Margaret Cole, head of the FSAs enforcement division, said, employees were able to take advantage of UBS' inadequate systems and controls.

The traders had free rein to make unauthorised trades with customer money that they were then able to conceal, according to Cole.

It is imperative, particularly in these more challenging financial conditions, that firms have suitable systems and controls to keep their houses in order, she said

Where firms fall short in this area, the consequences will be severe.

Simon Morris, of law firm CMS Cameron McKenna, described the fine as good news for the FSA, which now comes across as the credible deterrent against financial crime that it has so long talked about becoming.

Further reading:

HSBC fined 3.2m for losing customer data