Premier FX was authorised by the FCA under the Payments Services Regulations to carry out money transfers for remittances.

But, says the FCA, it falsely told customers that it was also able to hold their funds indefinitely and that their money would be held in secure, segregated client accounts and protected by the Financial Services Compensation Scheme.

"None of these claims were true," says the watchdog.

Because of the false claims, many customers paid their funds to Premier FX to hold without an onward transfer instruction on the basis that the money would be repayable on demand.

Premier FX was controlled by Peter Rexstrew, the sole shareholder and director. He restricted access to the firm's bank accounts and dealt with nearly all of the transactions out of, and between, the accounts.

Rextrew died in 2018 and the firm was taken over by his children. They tried to continue the business and make payments but eventually realised that the firm held insufficient funds to repay all claims and so they ceased trading and reported the matter to the FCA.

Because the company is in liquidation and there is a significant liability to creditors, most of whom are consumers, the FCA decided not to impose a financial penalty, instead opting for public censure.

Mark Steward, executive director, enforcement and oversight, FCA, says: "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."