Barclays Pays £10.8m Following Collapse Of Partner Payments Firm

March 1, 2022
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Barclays has agreed to pay £0.78m to settle an investigation by the Financial Conduct Authority after partner payment firm Premier FX collapsed and undertaken to compensate customers for their losses worth £10m.

Barclays has agreed to pay £0.78m to settle an investigation by the Financial Conduct Authority (FCA) after partner payment firm Premier FX collapsed and undertaken to compensate customers for their losses worth £10m.

The FCA found that Barclays Bank had shortcomings in the oversight in its relationship with collapsed payments firm Premier FX.

Barclays, which acted as Premier FX’s sole banker in the UK, failed to make enquiries to ensure that the payments firm's actual business activity aligned with the bank’s expectations and did not identify that Premier FX’s internal controls were deficient.

The FCA 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 firm started to fall apart in June 2018 when Peter Rexstrew, sole shareholder and director of Premier FX, died and it became evident that the firm did not hold sufficient funds to satisfy all customers’ instructions.

Although Premier FX was authorised to provide foreign exchange and money remittance services, it was also taking deposits and dealing in investments.

It did not hold customers’ funds securely but used them for other purposes, meaning that they were not available when Premier FX was liquidated.

The FCA found that Barclays failed to conduct its business “with due skill, care and diligence” in the oversight and monitoring of its business relationship with Premier FX, according to the final notice.

Barclays will pay £783,800 to the FCA, which reflects a discount of 30 percent received as a result of the settlement.

The bank has also agreed voluntarily to cover the losses of Premier FX customers whose claims have been accepted by Premier FX’s liquidators.

Following the distribution by the liquidator, creditors received 9.8p for every £1 lost.

Barclays agreed to make a voluntary payment of £10,076,943.75 that will make up the difference and will fully compensate all 167 customers of Premier FX whose claims were accepted.

“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,” Mark Steward, FCA executive director of enforcement and market oversight, commented.

“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,” he noted.

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