The Financial Conduct Authority (FCA) has publicly censured Horn Express Limited (formerly known as Qaran Express Money Transfer Limited, “QEMTL”) for failing to safeguard and segregate customer funds. The FCA would have fined QEMTL £136,687 had the firm not produced verifiable evidence that imposing a fine would have caused it serious financial hardship.
QEMTL is a money transfer company authorised by the FCA under the Payment Services Regulations 2009 (“PSRs”, for which the FCA is the competent authority). It has not traded as a money transfer business since early 2012. This is the first time that a public sanction has been imposed on a payment institution authorised under the PSRs for misconduct under the PSRs (other than for failures to comply with minimum conditions for registration or authorisation under the PSRs).
QEMTL’s customers commonly used its services to transmit money overseas from the UK. At times during the period 1 December 2009 to 26 August 2011, QEMTL mixed customer funds with its own monies in the same bank account and failed to record accurately how much of the money in that account was customers’ funds. From 1 December 2009 until 16 December 2011 QEMTL also failed to properly reconcile the customer funds held in its bank account.
Further, QEMTL did not set the bank account up correctly. For instance, it was not labelled as a customer funds account, thereby creating a risk that, in the event of QEMTL’s insolvency, customers might have lost their money.
In addition to its failures to segregate and safeguard customer funds correctly, QEMTL also failed to sufficiently supervise its branches and agents. The records of compliance visits that it carried out failed to record an adequate assessment of the safeguarding and segregation requirements for customers’ funds.
Bill Sillett, FCA head of retail enforcement said:
"This case highlights the wide remit of the FCA; we are not just the regulator of firms authorised under the Financial Services and Markets Act. We will use our enforcement powers to the full extent and this case, the first of its kind, demonstrates that we will take action where breaches are identified. It is not acceptable that customers’ monies are put at risk by firms, whether in the financial services or payment services sector, and we will take action to tackle this."
Notes for editors
- The final notice for QEMTL.
- The FCA’s approach to the Payment Services Regulations 2009 is set out in the Approach Document.
- On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers
- You can find more information about the FCA, as well as how it is different to the PRA.