Barclays has been fined £38m for failing to protect customer’s money, the largest ever handed out for such client asset breaches.
The financial watchdog ruled Barclays put at risk £16.5m of customer money and failed to protect it from potential costs, delays and loss of assets if the bank were to become insolvent.
The size of the fine reflected the “significant weakness” in Barclays’ investment division between 2007 and 2012 as well as the number of accounts affected, said the Financial Conduct Authority.
The FCA’s director of markets David Lawton called Barclays “lack of focus on the rules” unacceptable while enforcement director Tracey McDermott said the bank failed to take notice of previous action by the regulator.
Barclays settled at an early stage, however avoiding a more costly payout of £54m.
“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,” said McDermott.
Barclays failed to follow rules correctly when opening 95 custody accounts in 21 countries resulting in its records not showing which company in the bank’s investment division was responsible for the assets. It also failed to set up the correct legal arrangements for the companies in addition to incorrect data and account naming which suggested assets belonged to Barclays rather than clients.
The fine is nearly four times bigger than the previous penalties handed out by the FCA for client asset breaches.
Blackrock was forced to payout £9.5m in 2012 for failing to protect client assets over more than three years.
Just four of the seventeen penalties ever given for these type of failings have been over £1m.
It's the second largest fine for Barclays in the UK , just behind its almost £60m payment over Libor and Eurolibor in 2012.
It also ranks as the seventh largest fine ever handed out by the FCA and its predecessor, the Financial Services Authority.