The FCA publicly censured money remittance firm Premier FX Limited in February 2021 for failing to safeguard its customers’ money and for misuse of its payment accounts under the Payments Services Regulations. Premier FX, which is in liquidation, seriously misled its customers about the services it was authorised to provide and how it held its customers’ money.
Premier FX was authorised by the FCA under the Payments Services Regulations to perform the regulated payment service of money remittance. Money remittance is the transfer of money without any payment account being created in the name of the customer, and where the funds are solely received to transfer a corresponding amount to a third party.
In reality, however, Premier FX seriously misled its customers between 2013 and 2018 by informing them that it was able to hold their funds indefinitely, that their funds would be held in secure, segregated client accounts and that their funds would be protected by the Financial Services Compensation Scheme. None of these claims were true. Because of these misrepresentations, many customers paid their funds to Premier FX to hold without an onward transfer instruction on the basis that the funds would be repayable to them on demand.
Premier FX failed to comply with requirements relating to the safeguarding of funds and the use of payment accounts imposed on it under the Payment Services Regulations 2009 and the Payment Services Regulations 2017 between 2013 and 2018. An authorised payment institution like Premier FX should not hold a customer’s funds unless accompanied by a payment order for onward transfer, either to be executed immediately or on a future date.
Premier FX was not permitted to hold its customers’ funds indefinitely as this may have amounted to accepting deposits, which is separately regulated under the Financial Services and Markets Act 2000.
Peter Rexstrew, who was the sole shareholder and director of Premier FX, controlled all aspects of its operations. He restricted access to Premier FX’s bank accounts and, except for brief periods when he was incapacitated through illness, dealt with nearly all of the transactions out of, and between, the accounts, including reconciliations. The FCA has also identified many instances of Premier FX customers paying funds directly into his personal bank accounts in the UK, Portugal and Spain.
Peter Rexstrew also used funds from the client account to make maintenance payments and to purchase a separate firm, Global Currency Service.
Although the FCA has not been able to identify definitively why Peter Rexstrew operated this scheme, it is likely that Premier FX had been loss-making for some years and that he needed new funds to meet existing debts. Premier FX’s true financial position became evident within weeks of his death in 2018.
If you’d like to know more about how we can help you with your payment services safeguarding and governance arrangements, or with any other aspect of payment services compliance, our expert team is here to help.
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