Barclays in $97m settlement after overcharging claims
This article contains affiliate links. We may earn a small commission on items purchased through this article, but that does not affect our editorial judgement.
The US Securities & Exchange Commission (SEC) said it took enforcement action against Barclays Capital over alleged violations that the organisation said saw clients overcharged by nearly $50m.
The SEC said it found two of the British lender’s advisory programmes charged fees to more than 2,000 clients for services that were not performed as sold.
Advertisement
Hide AdAdvertisement
Hide Ad• READ MORE: Barclays tops table for financial service complaints
These included advisory clients who invested in third-party investment managers and investment strategies which under-performed while they were not monitored, the SEC said.
The bank also allegedly collected excess charges on the sales of investment funds from 63 brokerage clients by recommending more expensive share classes when less expensive options were available, while another 22,138 accounts overpaid due to alleged miscalculations and billing errors by the firm.
Without admitting or denying the findings, Barclays agreed to set up a fund, including a $30m penalty, to repay the clients.
Catherine O’Riordan, co-chief of the SEC Enforcement Division’s Asset Management Unit, said: “Barclays failed to ensure that clients were receiving the services they were paying for. Each set of clients who were harmed are being refunded through the settlement.”
A spokesman for Barclays declined to comment.
The settlement comes as the lender completes a swingeing overhaul of its business, including offloading parts of its investment and wealth management arms in Hong Kong and Singapore.
In February, the company announced pre-tax profits had surged to £3.2 billion, up from £1.1bn a year earlier, thanks to a boost from its investment banking arm, as well as lower fines and mis-selling charges.
Advertisement
Hide AdAdvertisement
Hide AdChief executive Jes Staley, who has been selling unwanted businesses to focus on UK and US operations, said at the time the group had “accomplished a lot in a year”.
• READ MORE: Barclays profits almost treble as overhaul nears end
The settlement also comes after Staley saw off a shareholder rebellion yesterday after apologising to investors for breaking rules designed to protect whistleblowers.
He told investors at Barclays’ annual general meeting in London that he made a mistake after he attempted to identify a whistleblower at the bank.
Investors had been urged to abstain from a vote backing his re-election at the AGM over the affair, while it also recently emerged that his pay will be docked over the governance failings.
In the end just 2.8 per cent of votes cast at the bank’s annual meeting were against his re-election although abstentions totalled 13.8 per cent.
Addressing the shareholder gathering, Staley said: “I feel it is important that I acknowledge to you – our shareholders – that I made a mistake in becoming involved in an issue which I should have left to the business to deal with.
Advertisement
Hide AdAdvertisement
Hide Ad“I have apologised to the board, and I would today like to apologise to you as well, for that error.”
Staley is also fighting to save his reputation after it was recently revealed that he intervened in a dispute between his brother-in-law and US private equity giant KKR, which is a major Barclays client.
Barclays chairman John McFarlane told investors that while the group was close to completing its overhaul, “further challenges remain”.
He said the bank still needs to resolve a “number of material historical legacy conduct issues”.