Charles Schwab UK Pays £8.96 Million Fine for Safeguarding and Compliance Failures

​The Financial Conduct Authority (FCA) announced that it has fined Charles Schwab UK Ltd (CSUK) , the UK subsidiary of the American multinational broker Charles Schwab £8.96 million over its failure to protect client assets.

The regulator finds that between August 2017 and April 2019, the company transferred client money to its affiliate Charles Schwab & Co., Inc. (CS&C), a firm based in the United States.

CSUK failed to arrange adequate protection for its clients' assets under UK rules as CS&C's general pool contained both firm and client money and was held for both UK and non-UK clients.

In addition, The firm did not at all times have permission to safeguard and administer custody assets, and failed to notify the FCA of the breach when applying for the correct permission and then made a false statement to the FCA.

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:”Charles Schwab UK failed to get the correct permissions from the FCA; then failed to be open with us and, finally, failed to put in place the necessary safeguards to ensure, if required, there could be an orderly return of client assets.”

“Firms, including newly-established businesses or firms coming into the UK from overseas, are responsible for ensuring they comply with our rules, and are expected to make sure they have the right protections in place.”

CSUK agreed to settle the case and qualified for a 30% discount. The financial penalty would otherwise have been £12,804,600.