Three units of London-based Barclays Plc have been penalized by Australia’s securities regulator for failing to tell clients they didn’t hold local financial services licenses and instead were regulated overseas.
Under the Australian regime, foreign firms which offer services to the wholesale market can obtain exemptions from full domestic licensing requirements, provided they make prominent disclosures that they are regulated overseas.
The Australian Securities & Investments Commission said in a statementThursday that the units — Barclays Capital Inc., Barclays Capital Asia Ltd., and Barclays Capital Securities Ltd. — failed to disclose the information to clients or inform ASIC of the breaches in a timely manner.
“The duration and number of breaches together with the failure to report breaches in time demonstrated serious, systemic weaknesses in the compliance controls implemented by the Barclays entities to meet their Australian regulatory obligations,” ASIC said in a statement.
Barclays Capital and Barclays Capital Asia were not able to show they made the necessary disclosures since they began using the exemption in 2004 and 2006, respectively. Barclays Capital Securities could not show evidence of disclosure from 2004 to 2014.
Barclays largely exited the Australian market in 2016 as part of a widercutback across the Asia-Pacific region.
The three units have agreed to an enforceable undertaking with the regulator — an Australian legal device often used instead of civil court action — and have agreed to engage an independent expert to review their compliance frameworks. Collectively they will also make a A$500,000 ($383,000) contribution to the local Ethics Centre.
“We are pleased that this issue has been resolved in such a positive way for Australia and Barclays,” a Barclays spokeswoman in Hong Kong said in an emailed statement.