Barclays fined by FCA for failure over Premier FX 

Barclays was Premier FX’s sole banker in the UK and has been censured by the FCA for failure to safeguard its customers’ money, as well as for breaching Payment Services Regulations guidelines on its payment accounts between 2013 and 2018.

The FCA had authorised Premier FX to perform the regulated payment service of money remittance – the transfer of money with no payment account being created in the name of the customer. The funds should be solely received to transfer a corresponding amount to the third party.

But Premier FX misled its customers by stating that it was able to hold their funds indefinitely, that these funds would be protected in segregated client accounts and would be secured by the Financial Services Compensation Scheme.

These claims were all untrue, the FCA said.

An authorised payment institution such as Premier FX would not be authorised to hold customers’ funds unless accompanied by a payment order for onward transfer. It would amount to accepting deposits, which is separately regulated under the Financial Services and Markets Act 2000.

Rather than imposing a substantial financial penalty on Premier FX, the FCA decided a public censure to be more appropriate, given that the firm is in liquidation.

The FCA found Barclays to have failed to make sufficient enquiries in identifying Premier FX’s internal controls as deficient. They concluded it constituted a failure in conducting business with due skill, care and diligence.

Barclays will make a voluntary payment of £10m to make up the difference following distribution by the liquidator that amounted to 9p for every £1 lost. This means that all 167 customers of Premier FX with accepted claims will have all their money returned by the end of March 2022.

This action ends the FCA’s investigation into Premier FX and associated parties.

Mark Steward, executive director of enforcement and market oversight, commented: “Premier FX, which handled money on behalf of other people, presented particularly high risks of financial crime and fraud. Barclays was aware of these high risks in providing banking services to Premier FX but failed to take reasonably appropriate steps to mitigate those risks.

"Barclays’ agreement to meet the deficiency in Premier FX’s funds mitigates the actual losses to Premier FX’s customers. This is a significant step to the credit of the bank and has reduced substantially the sanction that otherwise would have been imposed”.