Barclays hit with £2.45m fine over 'weak' transaction reporting

Published on Tuesday 8 September 2009 22:10

BARCLAYS has been fined £2.45 million for "serious weaknesses" in transaction reporting at its investment banking arm.

The fine is the eighth largest imposed by the Financial Services Authority (FSA), which said systems and controls failures came to light while the watchdog was investigating suspected market abuse by a third party.

Barclays escaped an even bigger fine of 3.5m after the watchdog offered a 30 per cent discount following co-operation from the banking giant.

The FSA uncovered failures by Barclays to provide accurate transaction details as required by the close of business each day – information used by the regulator to detect and investigate suspected market abuse.

Barclays – whose investment banking boss, Bob Diamond, is also the bank's president – did not have adequate systems and controls in place to meet stringent new reporting rules, while the FSA also discovered errors in the data submitted.

The breaches took place throughout 2007 and 2008, "despite repeated reminders to firms of their obligations to provide accurate data", according to the FSA.

Alexander Justham, director of markets for the watchdog, said: "Barclays' reporting failures could have a damaging impact on our ability to detect and investigate suspected market abuse.

"The penalty imposed on Barclays is significantly higher than previous penalties imposed for transaction reporting errors. This reflects the serious nature of Barclays' breaches and is a warning to other firms that the FSA will not tolerate inadequate systems and controls."

The FSA found failures surrounding 57.5 million transactions by Barclays, with errors in nearly 100 per cent of its reportable transactions. Barclays blamed inaccuracies on its IT systems and has since committed "extensive" investment to improve and resolve transaction reporting operations.

A spokesman for the bank added: "We have worked constructively and in full co-operation with the FSA.

"The regulatory reporting errors were caused by inaccuracies in our data feeds to the FSA. No counterparties, clients, or financial reports were affected."