Barclays fined for failing to protect assets
24 September 2014 London
Image: Shutterstock
Barclays Bank has been fined nearly £38 million by the Financial Conduct Authority for failing to properly protect clients’ custody assets, worth £16.5 billion.
This is the highest fine ever imposed by the FCA for client asset breaches, which reflects ‘significant weaknesses’ in the systems and controls in Barclays’ investment banking division between November 2007 and January 2012.
Because of these weaknesses, clients risked incurring extra costs, lengthy delays or losing their assets if Barclays had become insolvent.
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 important of the regime, which protects custody assets work £10 trillion held in the UK.”
The FCA’s rules protect client assets in case a firm becomes insolvent. Barclays failed to properly apply these rules when opening 95 custody accounts in 21 countries.
Records of the accounts did not correctly reflect which company within its investment banking division was responsible for the assets in the accounts and Barclays also failed to set up the appropriate legal arrangements with the accounts.
In addition to these failings, account naming or incorrect data suggested that the account assets belonged to Barclays instead of its client.
These failings 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).
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 safeguarding client assets.”
By agreeing to settle at an early stage, Barclays avoided the full penalty of £53.9 million.
This is the highest fine ever imposed by the FCA for client asset breaches, which reflects ‘significant weaknesses’ in the systems and controls in Barclays’ investment banking division between November 2007 and January 2012.
Because of these weaknesses, clients risked incurring extra costs, lengthy delays or losing their assets if Barclays had become insolvent.
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 important of the regime, which protects custody assets work £10 trillion held in the UK.”
The FCA’s rules protect client assets in case a firm becomes insolvent. Barclays failed to properly apply these rules when opening 95 custody accounts in 21 countries.
Records of the accounts did not correctly reflect which company within its investment banking division was responsible for the assets in the accounts and Barclays also failed to set up the appropriate legal arrangements with the accounts.
In addition to these failings, account naming or incorrect data suggested that the account assets belonged to Barclays instead of its client.
These failings 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).
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 safeguarding client assets.”
By agreeing to settle at an early stage, Barclays avoided the full penalty of £53.9 million.
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