UK banking has suffered another damaging blow to its already shaky reputation after Barclays was fined £26million for trying to rig the price of gold.
The Financial Conduct Authority (FCA) – the industry watchdog – said the bank failed to manage conflicts of interest between itself and its customers in relation to the way the price of gold is set, between 2004 and 2013.
It comes amid ongoing global investigations into allegations of banking industry collusion in the £3trillion-a-day travel money markets.
UK banks have already been found guilty of mis-selling payment protection insurance (PPI) and complex interest rate swaps, costing them billions of pounds in compensation payments.
The Libor interbank lending rate-rigging scandal scandal has also cost them a fortune as they try to shake off lingering impacts of the financial crisis, which many people blame them for causing in the first place.
Adding to growing public distaste over the banks and their business practices, the industry’s reputation is still tarnished by a culture of high salaries and bonuses.
Governments, central banks, and investment funds are the world’s largest holders of gold, making its price a key factor in the global economy.
Barclays’ fine results from the behaviour of Daniel James Plunkett, who was a trader on the bank’s precious metals desk on June 28, 2012.
The FCA said that on that day Mr Plunkett exploited “weaknesses” in Barclays’ systems and controls to seek to influence that day’s 3pm gold price and profit ata customer’s expense.
Mr Plunkett’s actions boosted his trading book by £1.04million, the FCA said after it fined him £95,600 and banned him from the industry.
Tracey McDermott, the FCA’s director of enforcement and financial crime, said the gold-fixing failings had once again tarnished the UK’s banking sector.
She added: “A firm’s lack of controls and a trader’s disregard for a customer’s interests have allowed the financial services industry’s reputation to be sullied again.
“Plunkett has paid a heavy price for putting his own interests above the integrity of the market and Barclays’ customer.
“Barclays’ failure to identify and manage the risks in its business was extremely disappointing.”
Barclays and Mr Plunkett agreed to settle at an early stage of the probe, meaning they each qualified for a 30% discount to their fines.
This meant the bank’s penalty was reduced from £37.2million and the trader’s was cut from £136,600.
Barclays chief executive Antony Jenkins said: “We very much regret the situation that led to this settlement.
“Barclays has undertaken a significant amount of work to enhance our systems and controls and is committed to the highest standards across all of our operations.
“While there is much more to do to achieve the deep-rooted cultural change we embarked upon at the start of 2013, Barclays today has significantly changed for the better. These situations strengthen our resolve to improve.”
Mr Plunkett is believed to have been suspended before being asked to leave Barclays.