Subject of Enforcement: Barclays Bank PLC
Date of Notice: 28th February 2022
Overview: The Financial Conduct Authority has fined Barclays Bank Plc (Barclays) £783,800 for oversight failings in its relationship with collapsed payments firm Premier FX. Barclays was Premier FX’s sole banker in the UK.
Barclays failed to make enquiries to ensure that Premier FX’s actual business activity aligned with Barclays’ expectations and 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 publicly censured Premier FX in February 2021 for failing to safeguard its customers’ money and seriously misleading its customers about the services it was authorised to provide. The FCA would have imposed a substantial financial penalty on Premier FX because of the serious failings in that case. However, it considered that a public censure was a more appropriate sanction given that Premier FX was in liquidation and there was a significant liability to its creditors, most of whom are consumers.
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.’
Penalty : Fine £783,800
Subject of Enforcement: Free Trade Ltd
Date of Notice: 8th February 2022.
Overview: Free Trade Ltd is authorised by the Authority with various permissions which include dealing in and arranging investment business. Chapter 4 of the Authority’s Conduct of Business Sourcebook (“COBS”) states all financial promotions issued or approved by a firm must be “fair, clear and not misleading” (COBS 4.2.1R).
The Authority has concluded that the Firm has breached COBS 4.2.1R by failing to consider the extent to which vulnerable customers might access a financial promotion (“the Promotion”) it had approved under section 21 of the Act to be made by a social media influencer, in order to promote its services of commission free investments. The Authority defines a vulnerable customer as someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care. 8. The Authority considers that the promotions provide consumers with the impression that they could reduce debt by following the steps taken by the social media influencer and use the Firm as a mechanism to make money. However, the Authority considers this to be misleading as there are no guarantees that any investment will result in positive gains in the short or long term. Consumers already in debt are likely to be particularly vulnerable to this.
In particular, the Firm’s social media promotions (Instagram, Twitter and Facebook) did not mention the required warnings in relation to risks to clients’ capital and were consequently in breach of COBS 4.2.1R and COBS 4.5.2R(2).
Penalty : Ordered to remove all paid for sponsored influencer advertisements and posts across all social media platforms including without limitation Instagram, TikTok, Facebook and YouTube; and