The Financial Services Authority (FSA) has fined Barclays Capital Securities £1.12 million for failing to protect client money.
Under FSA rules, financial firms are required to keep client money in a segregated account with trust status.
However, between 1st December 2001 and 29th December 2009, Barclays Capital segregated client money overnight but mixed it in with its own funds for between five and seven hours within each trading day.
According to the FSA, had Barclays Capital become insolvent when the money was not segregated, client cash would have been at risk.
Furthermore, the average daily amount that could have been lost increased from £6 million in 2002, to £387 million in 2009.
The Authority’s managing director of enforcement and financial crime, Margaret Cole, says: “The FSA has repeatedly emphasized 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.”
Last week, the FSA fined Barclays £7.7 million in relation to its sale of Aviva’s Global Balanced Income Fund and Global Cautious Income Fund, to 12,331 customers.
The bank was found to have committed multiple failings during the sales process.