Member Article

Xcap Securities fined £121k by FCA

Wilmslow-based investment banking firm, Xcap Securities, has been fined nearly £121,000 for client asset failings.

The Financial Conduct Authority (FCA) fined the retail investment and capital markets company a total of £120,900 after it failed to adequately protect its clients’ money and assets.

Xcap’s case is the first subject for FCA’s new penalty regime, which applies to faults made after 6 March 2010 and implements new penalty levels in such cases.

The company’s fine represents 2% of their average client money balance, plus an extra 0.2% of their average client asset balance.

Percentage levels will now be applied by the FCA with regard to the seriousness and duration of company breaches.

FCA anticipates cases around client asset failings will result in increased fines in comparison with similar cases dealt with under the previous regime.

Xcap fell foul of FCA Principle 3 and 10 between 29th June 2010, when it started trading, and 31st August 2011 by failing to properly segregate client money from its own, and failing to keep accurate records of client money and assets.

The firm, which is headquartered in London, also failed to carry out accurate client money reconciliations.

All these breaches resulted in risk that would have given their clients difficulty and delay in recovering their assets and money if Xcap became insolvent.

Tracey McDermott, director of enforcement and financial crime at the FCA, said: “This is the first case that the FCA has brought for breaches of the Client Assets rules using our new penalty regime.

“The new levels of penalty are expected to result in larger fines, demonstrating the seriousness with which we view these failures and serving as a stronger deterrent to firms.

“We have been very clear about our expectations of firms that have responsibility for investors’ money and safe custody assets.

“Xcap failed to meet the required standards from the very outset of its business and continued to have widespread failures for a number of months.”

This was posted in Bdaily's Members' News section by Miranda Dobson .