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Barclays receives record fine over client assets breach



Barclays Bank Plc has 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.

This is the highest fine ever imposed by the FCA or its predecessor the FSA for client assets breaches, reflecting ‘significant weaknesses’ in the systems and controls in Barclays’ Investment Banking Division between November 2007 and January 2012 and the number of affected accounts.

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."

A Barclays spokesperson said: "Barclays has subsequently enhanced its systems to resolve these issues and to ensure we have the requisite processes in place. No client has suffered any loss as a consequence of this weakness in our processes which existed prior to January 2012." 

The fine comes three years after Barclays paid out £1.1m for a similar issue.

Tracey McDermott, FCA director of enforcement and financial crime, added: "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."

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.

 

Picture credit: © Basphoto | Dreamstime.com - Barclays Tower, Canary Wharf Photo



UK & NI Ireland | Business ethics

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