Compliance
Barclays Hit By UK Regulator For Client Asset Failings

Barclays has been hit by a record-breaking fine for failings relating to client assets.
(Editor's note: As Barclays has an important presence in regions such as Asia, this article also appears on WealthBriefingAsia.)
Barclays has been
fined a record £37.7 million ($61.8 million) by the UK Financial
Conduct Authority for failing to properly protect clients’
custody assets and is the latest setback for the bank following
the LIBOR scandal in 2012.
The FCA said in a statement that the bank’s investment arm had
failed to protect client assets worth £16.5 billion between
November 2007 and January 2012.
It is the highest fine ever imposed by the regulator or its
predecessor the Financial Services Authority for client assets
breaches.
The regulator said “significant weaknesses” in the systems and
controls in Barclays’ investment banking division meant clients
risked incurring extra costs, lengthy delays or losing their
assets if the bank had become insolvent. Barclays did not profit
from the issue and no customers lost out.
It is the second time Barclays has been fined for client asset
breaches, after receiving a £1.1 million penalty in 2011 for
similar misconduct relating to client money.
“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 Tracey McDermott, the FCA’s director of enforcement
and financial crime.
The FCA and FSA have previously imposed 16 fines for misconduct
relating to client assets or client money. Other firms that have
been fined for similar offences include, Aberdeen Asset
Management, Blackrock, Rowan Dartington and JPMorgan.
Barclays acknowledged it had fallen short of what was expected
and accepted the FCA’s conclusion.
“Barclays has subsequently enhanced its systems to resolve these
issues and to ensure we have the requisite processes in place. No
client has suffered any loss as a consequence of this weakness in
our processes which existed prior to January 2012,” a
spokesperson for Barclays said.
The news follows yesterday’s announcement by Barclays that it had
appointed Akshaya Bhargava as the new chief executive of wealth
and investment management, taking up the role on 13 October and
filling a slot left by the departure of Peter Horrell.
The punishment comes on top of what have been a torrid few years
for the bank which has seen it rocked by a number of scandals. In
2012, Barclays was fined $450 million by US and UK regulators for
trying to manipulate LIBOR, which led to the resignations of
Barclays chief executive Bob Diamond and chairman Marcus Agius in
the UK.
The bank is currently undergoing major restructuring and in May
announced plans to shed 19,000 jobs, including 7,000 in its
investment arm.