The fine is the biggest ever imposed by the FCA or its predecessor for client assets breaches and is the second time Barclays has been fined for this offence. The FCA said the size of the fine, which is £5m more than that received by JPMorgan Chase for a similar breach, reflects the “significant weaknesses” in the systems and controls in Barclays’ investment banking division.
The breaches took place between November 2007 and January 2012.
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 £10trn held in the UK.”
Barclays’ failure to properly separate client assets meant those assets were at risk if the bank had become insolvent. The FCA said Barclays had failed to properly apply these rules when opening 95 custody accounts in 21 countries and as a result, its records did not correctly reflect which company within its investment banking division was responsible for the assets in the accounts.
Furthermore, Barclays also failed to set up appropriate legal arrangements with these companies.
The UK’s City watchdog added that these failings were compounded by flaws in account naming or incorrect data that suggested assets belonged to Barclays instead of its clients.
This breached the FCA’s Client Asset Rules and requirements that firms should have adequate management, systems and controls and properly safeguard clients’ 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
In 2011, Barclays was fined £1.1m over similar breaches.
