The FCA has publicly censured Premier FX Limited (Premier FX) for failing to safeguard its customers’ money and for misuse of its payment accounts under the Payments Services Regulations. In doing so, Premier FX seriously misled its customers about the services it was authorised to provide and how it held 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 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 (some customers paid hundreds of thousands of pounds sterling, euros or US dollars) to hold without an onward transfer instruction on the basis that the funds would be repayable 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.

The FCA would have imposed a substantial financial penalty on Premier FX because of the serious failings in this case. However, the FCA has considered that a public censure is a more appropriate sanction given that Premier FX is in liquidation and that there is a significant liability to its creditors, most of whom are consumers.

Peter Rexstrew, the sole shareholder and director of Premier FX, controlled all aspects of its operations. He restricted access to Premier FX’s bank accounts and, save for brief periods when he was incapacitated through illness, dealt with nearly all of the transactions out of, and between, the accounts. The FCA has not found evidence that any employees were involved in this deception.

Mark Steward, Executive Director of Enforcement and Market Oversight, commented:

‘This has been a complex investigation involving the analysis of hundreds of thousands of transactions across Premier FX’s bank accounts over the course of several years, in a range of currencies and through a number of overseas bank accounts. The investigation was complicated further by a lack of proper records.

‘We may never understand Peter Rexstrew’s motivation for operating Premier FX in this way, using new customers’ funds to pay existing customers or business expenses. Whatever the reasons for his deception, his scheme completely unravelled within a few weeks of his death, leaving a mess for others and losses for customers. Our notice sets out our findings on what happened as a matter of record.’

Peter Rexstrew died on 16 June 2018. His children, Katy Grogan and Charlie Rexstrew, were appointed as directors on 18 June 2018. They, and other Premier FX staff, attempted to continue the business and continued to make payments until it was evident the firm did not hold sufficient moneys to pay or satisfy all customers’ instructions. When an increasing number of customers came forward, they realised that the firm held insufficient funds to repay all customer claims and so they ceased trading and reported the matter to the FCA.

The FCA is acutely aware of the distress to customers following by the firm’s failure and the subsequent losses they incurred.

The FCA is continuing to investigate whether there were breaches of its rules by any other parties and, if so, will take action, including action to recover redress for any breaches that may have caused or contributed to losses to customers.