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Barclays fined £784,000 over Premier FX failures

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Barclays has been fined £783,800 for oversight failings in its relationship with collapsed payments firm Premier FX.

The Financial Conduct Authority (FCA) handed down the fine to Barclays, while the lender also agreed to make a voluntary payment of £10m to Premier FX customers by the end of March 2022.

It relates to Barclays’ failings in its relationship with collapsed payments firm Premier FX, which was its sole banker in the UK.

The FCA said Barclays failed to conduct its business with “due skill, care and diligence” when providing banking services to Premier FX.

Premier FX and Barclays’ relationship

Premier FX was regulated to transfer money from a customer to a third party, without a payment account being created.

However, the FCA found that Premier FX seriously misled customers by telling them it was able to hold funds indefinitely in a secure account with the sums protected under the Financial Services Compensation Scheme (FSCS).

Based on this information, many customers paid funds to Premier FX on an understanding that the money could be withdrawn on demand.

But Peter Rexstrew, the sole shareholder and director of Premier FX, restricted access to Premier FX’s bank accounts.

When he died in 2018, his two children were appointed as directors and they, along with staff, attempted to continue the business and make payments to customers. However, it eventually collapsed due to lack of funds.

In 2021, the FCA publicly censured Premier FX for failing to safeguard customers’ money and seriously misleading them about the services it was authorised to provide.

As Barclays was its sole banker in the UK, the FCA said it “failed to make enquiries to ensure that Premier FX’s actual business activity aligned with Barclays’ expectations”.

Further, it “did not identify that Premier FX’s internal controls were deficient”.

“This constituted a failure by Barclays to conduct its business with due skill, care and diligence”, the FCA stated.

Full amount returned

Barclays has been fined £783,800 which takes into account its voluntary move to cover the losses of Premier FX customers.

Following the distribution by the liquidator amounting to 9p for every £1 lost, Barclays’ voluntary payment of £10,076,943.75 will make up the difference, meaning all 167 customers of Premier FX with accepted claims will have 100% of their money returned.

The voluntary payment will be distributed to these customers by the liquidators by the end of March 2022.

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

Mark Steward, executive director of enforcement and market oversight, said: “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.”

A Barclays spokesperson, said: “Barclays has reached a resolution with the FCA following an investigation into its oversight and monitoring of a former customer, Premier FX Limited. As part of this resolution, Barclays has agreed to pay a penalty of £783,800 and make an ex gratia payment to be distributed amongst Premier FX’s customers. Barclays fully co-operated with the FCA’s investigation.”

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