FCA censures Premier FX for failing to safeguard customers’ money
The UK Financial Conduct Authority (FCA) has publicly censured Premier FX Limited but has stopped short of fining the firm. The censure stems from the firm’s failure to safeguard its customers’ money and for misuse of its payment accounts under the Payments Services Regulations.
Premier FX was authorised by the FCA under the Payments Services Regulations to perform the regulated payment service of money remittance. Money remittance is the transfer of money without any payment account being created in the name of the customer, and where the funds are solely received to transfer a corresponding amount to a third party.
In reality however, Premier FX seriously misled its customers by informing them that it was able to hold their funds indefinitely, that their funds would be held in secure, segregated client accounts and that their funds would be protected by the Financial Services Compensation Scheme.
None of these claims were true. Because of these misrepresentations, many customers paid their funds to Premier FX to hold without an onward transfer instruction on the basis that the funds would be repayable on demand.
Premier FX failed to comply with requirements relating to the safeguarding of funds and the use of payment accounts imposed on it under the Payment Services Regulations 2009 and the Payment Services Regulations 2017 between 2013 and 2018. The regulator explains that an authorised payment institution like Premier FX should not hold a customer’s funds unless accompanied by a payment order for onward transfer, either to be executed immediately or on a future date.
Premier FX was not permitted to hold its customers’ funds indefinitely as this may have amounted to accepting deposits which is separately regulated under the Financial Services and Markets Act 2000.
The FCA would have imposed a substantial financial penalty on Premier FX because of the serious failings in this case. However, the FCA has considered that a public censure is a more appropriate sanction given that Premier FX is in liquidation and that there is a significant liability to its creditors, most of whom are consumers.
Peter Rexstrew, the sole shareholder and director of Premier FX, controlled all aspects of its operations. He restricted access to Premier FX’s bank accounts and, save for brief periods when he was incapacitated through illness, dealt with nearly all of the transactions out of, and between, the accounts. The FCA has not found evidence that any employees were involved in this deception.
Peter Rexstrew died on June 16, 2018. His children, Katy Grogan and Charlie Rexstrew, were appointed as directors on June18, 2018. They, and other Premier FX staff, attempted to continue the business and continued to make payments until it was evident the firm did not hold sufficient moneys to pay or satisfy all customers’ instructions. When an increasing number of customers came forward, they realised that the firm held insufficient funds to repay all customer claims and so they ceased trading and reported the matter to the FCA.
The FCA is continuing to investigate whether there were breaches of its rules by any other parties and, if so, will take action, including action to recover redress for any breaches that may have caused or contributed to losses to customers.
More information regarding this matter can be found here.