Police have been called in to investigate after a couple from Bristol lose a holiday home and £272,000 in life savings, after the collapse of a £10 million foreign exchange firm. Civil servants, Bryn and Trish Pailing were fortunate enough to retire early and were about to complete the purchase of a dream home on Portugal’s Algarve coast.
It all began when the couple attended a ‘Place In The Sun’ exhibition in 2015 and met with Premier FX, who were sponsoring a Portuguese stand. They spoke with company representatives, who explained they acted as a foreign exchange company, that helped expats buy properties abroad and they operated as a holding company for those funds. Premier FX stated they held segregated bank accounts with Barclays, which protects customers and their money.
Segregated bank accounts are accounts that hold the funds of a customer separate from the funds of the foreign exchange company, in the interests of the customer’s security. Foreign exchange service providers use segregated bank accounts to separate client funds in their own client bank account, meaning there Is no relation with the bank or foreign exchange company’s bank account. The most important purpose of segregated bank accounts are that they provide a counter party with assurance that their funds can never be misappropriated. This ensures that the funds are clearly identified as belonging to a particular client and it ensures that the company can never interfere with the client funds. For instance, if the foreign exchange company went bankrupt, the client funds would remain completely safe. Historically, unscrupulous stock brokers have used clients funds for their own use, which often resulted in the failure of the brokerage with the loss of client funds. Holding a segregated account is some measure to protect against such unscrupulous and fraudulent behaviour.
The couple went away from their encounter with Premier FX and researched the company and everything they had been told. They checked with the FCA, who confirmed they were FCA authorised. Based on this, the couple went ahead, set up an account with Premier FX and transferred their entire life savings of £272,000.
They had found a home they wanted to purchase and were just days away from completion, when in June, the sudden death of founder and director, Peter Rexstrew, triggered a crash of the company. His son and daughter were appointed directors, but stopped trading in July, after Barclays provided little assistance and they were unable to reconcile the company’s finances. When the FCA discovered the company’s unauthorised activity, it forced it into administration.
Premier FX ceased all trading, after the Financial Conduct Authority ascertained the company did not have full authorisation to trade. Premier FX was only authorised to transfer client’s money. Instead, they encouraged customers to keep their money in the company and wait for a rise in currency exchange rates, in the belief they would make a profit from doing so. Administrators for the company have so far told customers not to expect any compensation, as Premier FX were never authorised to hold their money.
A spokesperson for the FCA said: “We are very concerned that there was criminal activity taking place at Premier FX in relation to missing funds. We are investigating the business undertaken by Premier FX and will take action against any individuals we find to have broken the law, in order to return money to customers of the firm.”
Despite having the protection of the segregated bank account, held by Barclays, customers have been told they may have to wait up to 2 years before being able to claim back their money, if at all.