City watchdog report on failed currency exchange a 'whitewash'


Customers who lost hundreds of thousands of pounds when a currency exchange company collapsed have accused the financial watchdog of “whitewashing” a report into the firm.

Customers of failed firm Premier FX are still waiting for answers as to why the firm was given a clean bill of health by the Financial Conduct Authority just months before it was put into administration in August 2018.

In a final notice published yesterday, the regulator found the firm had seriously misled customers about the services it was authorised to provide and how it held customers’ money.

Premier FX was licensed to transfer money from sterling to a range of foreign currencies but was not allowed to hold on to customer cash for an extended period.

However customer funds were not held in secure, segregated client accounts, the FCA found. Instead, they were put into a pot the firm used to make payments to other customers and meet its own business expenses.

Former customers have accused the regulator of a whitewash as the report makes no mention of why the FCA had approved the firm's operations in May 2018, shortly before its demise.

In 2019 then-FCA chief Andrew Baileysaid the watchdog would “thoroughly investigate” why wrongdoing had not been detected at the firm.

Pauline Creasey, a small-business owner from Kent, lost £464,000 when the firm collapsed. Dr Creasey was changing euros into dollars after selling her home in Portugal and was setting up a business in America with the funds.

Dr Creasey said: “As expected, the FCA final notice is rather a whitewash and attributes no blame or responsibility to the regulator.”

An FCA spokesperson said: "The FCA has received a number of complaints about its conduct in relation to the regulation of Premier FX. Now that the FCA's formal enforcement investigation into Premier FX itself is complete, the FCA is writing to all complainants today to set out its next steps to investigate these allegations under its Complaints Scheme."

Dr Creasey said a simple investigation would have discovered wrongdoing at the firm. She said: “It would be better if the FCA didn’t authorise these firms at all if they can’t monitor them. As a consumer, you think that checks are going on and firms are properly verified before they’re authorised. That’s clearly not going on, and it’s an invitation to fraudsters.

“The FCA is very keen not to pin any blame on themselves, which is predictable. It’s all a bit convenient, and it’s rather weak.”

Dr Creasey added: "The FCA investigation focused on the regulatory infringements of the firm and how it used its authorisations to misrepresent its services to customers. Premier FX was not authorised to hold client money."

The watchdog said yesterday it would have imposed a substantial financial penalty on Premier FX but had decided against doing so as the company is in liquidation and there is still a significant liability to customers who lost money.

Instead, it has issued a “public censure” against the firm, which Telegraph Money understands is viewed within the organisation as a “credible deterrent” to other firms. The FCA said it is investigating whether there were breaches of its rules by any other parties.


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