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Screenshot of a breaking news alert e-mail from Q2 2017
Barclays Bank Plc (Barclays) has today been fined £37,745,000 by the Financial Conduct Authority (FCA) for failing to properly protect clients’ custody assets worth £16.5 billion. As a result clients risked incurring extra costs, lengthy delays or losing their assets if Barclays had become insolvent.
The FCA’s Rules are there to protect client assets if a firm becomes insolvent. Barclays failed to properly apply these rules when opening 95 custody accounts in 21 countries. As a result, Barclays’ records did not correctly reflect which company within its Investment Banking Division was responsible for the assets in the accounts. Barclays also failed to set up appropriate legal arrangements with these companies.
David Lawton, FCA director of markets, said: “Safeguarding client assets is key to maintaining market confidence if firms fail – Barclays lack of focus on the rules was unacceptable. Our on-going scrutiny of firms’ compliance reflects the importance of the regime, which protects custody assets worth £10 trillion held in the UK.”
These failings were compounded by flaws in account naming or incorrect data that suggested assets belonged to Barclays instead of its clients.
Tracey McDermott, FCA director of enforcement and financial crime, said: “Barclays failed to apply the lessons from our previous enforcement actions, numerous industry-wide warnings, and exposed its clients to unnecessary risk. All firms should be clear after Lehman that there is no excuse for failing to safeguard client assets.”
The violation breached the FCA’s Client Asset Rules and requirements that firms should have adequate management, systems and controls (Principle 3) and properly safeguard clients’ assets (Principle 10).
The FCA’s enforcement action reflects its objective to secure appropriate consumer protection and enhance the integrity of the UK financial system. Barclays agreed to settle at an early stage, qualifying for a 30% discount. Without this, the FCA would have imposed a penalty of £53,921,619.
For the official release, click here.
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