Schwab to Pay $12M Fine to U.K. Regulators

Charles Schwab U.K. has agreed to pay $12 million (about £9 million) to settle claims that it failed to adequately protect client assets, carrying out a regulated activity without permission and making a false statement, according to the Financial Conduct Authority.

“Charles Schwab U.K. fully cooperated with the FCA’s investigation, has addressed the issues identified, and agreed to a penalty of £8,963,200,” a U.S. Charles Schwab spokesperson told ThinkAdvisor by email Tuesday.

“Client money and assets were protected at all times in accordance with U.S. rules,” she said. “Charles Schwab UK maintains the highest standards of service, governance, and security, and although no clients or assets were negatively impacted, we regret the errors and are pleased this matter has been resolved.”

Clients impacted by the breaches were all retail customers, according to Mark Steward, executive director of Enforcement and Market Oversight at the FCA.

The company “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,” he said in a statement.

Details on the Matter

The breaches occurred between August 2017 and April 2019, after Schwab’s U.K. division “changed its business model,” the U.K. regulator claimed.