Abbey National has been dealt a blow that could hasten its retreat from fund management after being fined a record £2.3m (€3.3m) by the UK's Financial Services Authority (FSA) for compliance breaches and flouting of money laundering rules.

The fine comes as Abbey National has been winding down its investment operations in areas including private equity and is focusing its efforts in asset management on low risk multi-manager products. Earlier this year it closed Talorcan, its Glasgow based alternative investment business.