The Financial Conduct Authority (FCA) has fined Barclays Bank £38m for failing to properly protect clients’ custody assets worth £16.5bn after the regulator identified ‘significant weaknesses’ in the bank’s systems and controls
The regulator said this was the highest fine ever imposed by the FCA or its predecessor the Financial Services Authority for client assets breaches.
It relates to deficiencies in the way Barclays’ investment banking division handled client monies between November 2007 and January 2012 which meant clients risked incurring extra costs, lengthy delays or losing their assets if Barclays had become insolvent.
Barclays failed to properly apply the 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.
The FCA said 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.'
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.
