The Australian Securities and Investments Commission (ASIC) has accepted enforceable undertaking from Barclay’s foreign financial services providers based in the US, Hong Kong and the UK due to the significant breaches of the conditions of the ASIC class order licensing exemptions.
According to the regulator, all three entities which included:
- Barclays Capital Inc. (BCI) domiciled in the US;
- Barclays Capital Asia Limited (BCAL) domiciled in Hong Kong; and
- Barclays Capital Securities Limited (BCSL) based in the UK
had failed to disclose to their clients they were exempt from holding an Australian financial services licence (AFSL) and were regulated by the respective overseas regulatory authority.
Additionally, the Barclays’ entities failed to report these material breaches within the 15-day timeframe which meant they had automatically excluded themselves from the benefit of the ASIC class order licensing exemptions.
According to ASIC, in particular BCI and BCAL failed to demonstrate that the requisite disclosure was made to clients in 2004 and 2006, respectively.
At the same time, BCSL was not able to demonstrate that the requisite disclosure to clients had been made across a 10-year period from 2004 and 2014.
BCI had also failed to notify ASIC of certain offshore investigation and enforcement matters within the time required of foreign financial services providers.
As part of the terms of the EU, the Barclays entities would contribute $500,000 to The Ethics Centre for research and development into the provision of financial services to Australian clients.
Also, the Barclays entities must engage an ASIC-approved independent expert to, among other things:
- Review and test the compliance framework implemented by the Barclays entities following the reporting of breaches, to meet the relevant conditions of the ASIC licensing exemption; and
- Report any deficiencies and make recommendations on how to rectify those deficiencies to ensure effective and enduring compliance with the relevant conditions of the ASIC licensing exemption.
ASIC Commissioner Cathie Armour said: “Foreign financial services providers relying on a class order licensing exemption must have effective and enduring measures to ensure compliance with the conditions set out in these instruments, including the fundamental obligations relating to disclosure and reporting,”
“Entities that fail to self-report a breach of their obligations to ASIC within the required time will be subject to automatic and indefinite exclusion from the licensing exemption provided by these instruments.”
