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FSA fines Barclays Capital £1.1 million for client money failures

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FSA fines Barclays Capital £1.1 million for client money failures

The Financial Services Authority (FSA) has fined Barclays Capital Securities £1.12 million for failing to provide adequate protection for client money.

Barclays Capital has been accused of failing to protect and suitably segregate on an intra-day basis client money held in sterling money market deposits.

This contravened FSA client money rule which requires firms to keep client money separate from the firm's money in segregated accounts with trust status. This measure is designed to help safeguard and ring-fence the client money in the event of a firm's insolvency.

The fine comes just a week after the FSA fined the wider Barclays group £7.7 million for giving consumers poor advice when selling funds from Aviva.  

According to the FSA investigation, in an eight-year period starting from 1 December, Barclays Capital failed to segregate client money maturing from its sterling money market deposits on an intra-day basis.

While the money was segregated overnight, it subsequently matured into a proprietary bank account and were mixed on a daily basis with Barclays Capital’s own funds, typically for between five and seven hours within each trading day.

The average daily amount of client money which was not segregated increased from £6 million in 2002 to £387 million in 2009. The highest amount held in the account and at risk at any one time was £752 million.

The regulator pointed out that had the firm become insolvent within the five to seven hours each day in which the funds were unsegregated, this client money would have been at risk of loss.

FSA managing director of enforcement and financial crime Margaret Cole said: 'Barclays Capital committed a serious breach of FSA client money rules by failing to segregate millions of pounds of its clients’ money for over eight years. This posed a significant risk and the penalty reflects the amount of client money involved in this breach.

'The FSA has repeatedly emphasised the importance of ensuring that client money is adequately protected and in the past year has taken enforcement action against firms of all sizes for breaches of its client money rules.'  

In working out the level of the penalty the FSA took into account that the misconduct was not deliberate and that Barclays Capital rectified the situation on discovery and it became clear no clients of Barclays Capital suffered losses, while the firm did not profit from, or avoid losses as a result of the breach.

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Profile: The opportunity set that attracted Brett Williams to wealth management

Brett Williams is best known for helping to build some of the biggest platforms in the IFA market.He made the move over to wealth management to head SEI’s UK business earlier this year in the belief that this is where the best opportunities now lie.

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