Bank of Scotland plc

On 21 June 2019, the FCA has fined Bank of Scotland Plc (BOS). The reason for this action is because the Firm contravened Principle 11 (Relations with regulators) by failing to be open and cooperative in its communications with the Authority in relation to BOS’s suspicions that fraud may have taken place within its London and South East Regional Impaired Assets office headquartered in Reading (IAR) between 3 May 2007 to 16 January 2009. A serious control breakdown was discovered in early 2007 by BOS in IAR. The Director of IAR in the region, Lynden Scourfield, had been sanctioning limits and additional lending facilities beyond the scope of his authority undetected for at least three years. By 3 May 2007, BOS had identified suspicious conduct, including suspicions of fraud. On a number of occasions during the Relevant Period, internal reports within BOS referred to the issues that had been identified as the `Reading fraud’. However, it was not until July 2009, that BOS provided the Authority with full disclosure in relation to its suspicions and the report of the investigation that it had conducted. As a consequence of this action, the FCA has imposed a financial penalty of £45,500,000 (£65,000,000 pre-stage 1 discount) The FCA’s action took effect on 21 June 2019 and a copy of the Final Notice is displayed on the FCA's web site here: https://fca.org.uk/publication/final-notices/bank-of-scotland-2019.pdf  

On 4 June 2015, the Authority imposed a financial penalty of £117,430,600 on Lloyds Bank plc, Bank of Scotland plc and Black Horse Limited (LBG) for breaches of Principle 6 (Customers' interests) of the Authority's Principles for Businesses (the Principles). LBG agreed to settle at an early stage of the Authority's investigation. LBG therefore qualified for a 30% (Stage 1) discount under the Authority's executive settlement procedures. Were it not for this discount, the Authority would have imposed a financial penalty of £167,758,035 on LBG. Between 5 March 2012 and 28 May 2013 (the Relevant Period) LBG breached Principle 6 by failing to pay due regard to the interests of its customers, and by failing to treat them fairly when handling complaints from customers who had purchased Payment Protection Insurance ('PPI'). During the Relevant Period LBG assessed customer complaints relating to in excess of 2.3 million PPI policies and rejected 37% of those complaints. In particular: (a) LBG's complaint assessment process included guidance to complaint handlers which directed them to assume that LBG's PPI sales processes were 'compliant and robust', unless notified to the contrary.  This was described to complaint handlers as the 'Overriding Principle'.  The Overriding Principle was unfair to customers because: (i) there was a risk that it created a default assumption that LBG had not mis-sold the PPI policy that an individual customer was complaining about; (ii) customers may not have had the opportunity to provide evidence to enable the complaint handler to reach a fair outcome; and (iii) in some situations it affected the judgements made by complaint handlers who relied on it to rebut credible customer testimony and to not fully investigate customer complaints. (b) LBG failed to take into account information about Sales Process Failings identified from Root Cause Analysis when assessing complaints.  This was unfair to customers because it meant: (i) LBG failed to give balanced consideration to all available evidence; and (ii) the unfair effects of the Overriding Principle were compounded because this evidence was not available to complaint handlers to counter the assumption, created by the Overriding Principle, that LBG had not mis-sold the PPI policy that an individual customer was complaining about. (c) Where LBG complaint handlers relied on the Overriding Principle to reject customer complaints instead of investigating the actual circumstances of the complaint, there was a risk that the final decision letters did not accurately reflect the complaint handler's assessment of the complaint and reasons for the rejection.  This was unfair as it may have dissuaded some customers with valid complaints from providing further information to LBG to challenge the decision, or referring their complaint to the Financial Ombudsman Service. (d) The above failings resulted in a significant number of customer complaints being unfairly rejected. A copy of the Final Notice is displayed on the Authority's web site and can be accessed using the following link: http://fca.org.uk/static/fca/documents/lloyds-banking-group-2015.pdf

On 28 July 2014, the FCA imposed on Lloyds Bank plc and Bank of Scotland plc a financial penalty of £105,000,000 (split evenly between the two firms and discounted from £150,000,000 for early settlement) in respect of breaches of Principle 3 and 5 of the FCA's Principles for Businesses. The Firms committed misconduct by breaching Principle 5 and Principle 3 of the Authority's Principles for Businesses through manipulating submissions to two benchmark reference rates, the Repo Rate and LIBOR, in order to seek to manipulate those rates. The Final Notice can be found at the following link. http://www.fca.org.uk/static/documents/final-notices/lloyds-bank-of-scotland.pdf

On 10 December 2013 the FCA imposed a combined financial penalty of £28,038,800 on Lloyds TSB Bank plc and Bank of Scotland plc (the Firms) for breaching Principle 3 of the FCA's Principles for Businesses. The breaches occurred between 1 January 2010 and 31 March 2012 (the Relevant Period). The Firms settled at an early stage of the FCA's investigation. They therefore qualified for a 20% (Stage 2) discount under the FCA's executive settlement procedures. Were it not for this discount, the penalty would have been £35,048,500. The penalty is due to serious failings in the Firms' systems and controls governing financial incentives given to sales staff in LTSB, Halifax and BOS branches. These staff sold protection and investment products to customers on an advised basis (advisers). Advisers' incentives included higher risk features, such as variable salaries and bonus thresholds (giving disproportionate rewards for marginal sales). It meant advisers who met sales targets qualified for substantial salary rises and bonuses, while advisers who did not faced salary reductions. There was also a significant bias towards sales of protection products. There was, therefore, a significant risk that, if not adequately controlled, advisers would make inappropriate sales to customers to reach salary and bonus thresholds. The Firms' systems and controls were not appropriately focused on these specific higher risk features. In particular, the Firms failed to supplement routine business monitoring with appropriately risk-based monitoring that also focused on the risk profile of advisers. Further, while advisers had to meet certain competency standards to be eligible for salary rises and bonuses, this control was flawed as advisers could meet the standards even where the Firms had identified issues with their sales. The Firms' failure to manage and control adequately the risks from advisers' incentives derived from serious deficiencies in their governance over this area. There was a collective failure of the Firms' senior management to identify sufficiently advisers' incentives as a key area of risk requiring specific and robust oversight. The Firms are carrying out a review of sales conducted by higher risk advisers during the Relevant Period, and will provide redress to customers where appropriate.

On 15 February 2013 the FSA imposed a financial penalty of £4,315,000 on Lloyds TSB Bank Plc, Lloyds TSB Scotland Plc and Bank of Scotland Plc (together Lloyds Banking Group, LBG) by way of a single Final Notice. The penalty relates to LBG's failure to pay redress promptly to PPI complainants between 5 May 2011 and 9 March 2012 (the Relevant Period). LBG agreed to settle at an early stage of the FSA's investigation. It therefore qualified for a 30% (Stage 1) discount under the FSA's executive settlement procedures. Were it not for this discount, the FSA would have imposed a financial penalty of £6,164,327 on LBG. During the Relevant Period, LBG sent 582,206 decision letters to PPI complainants, agreeing to pay redress to them. In order to comply with its regulatory obligation to pay redress promptly, LBG aimed to make payment within 28 days of these decision letters. However, LBG failed to do so in up to 140,209 (24%) cases. 24,589 (4%) cases inadvertently dropped out of LBG's PPI redress payments process, and remedial action had to be taken subsequently to ensure those payments were made. These payments were identified as a result of customers telephoning LBG to chase payments and media attention. Following this, LBG carried out an investigation. LBG breached the FSA's Principles and rules by failing to: 1) take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems (Principle 3); and 2) comply promptly with offers of redress which LBG had made and which had been accepted by PPI complainants (DISP 1.4.1R(5)). In particular: (1) LBG failed to establish an adequate process for preparing redress payments to send to PPI complainants. In addition to a lack of initial planning by LBG, LBG's staff engaged on the redress process did not have the collective knowledge and experience to ensure that the process worked properly; (2) As a result, there were a number of serious deficiencies in LBG's PPI payment preparation framework. These deficiencies related to the way LBG processed data relating to customers' PPI redress payments before this data was sent to the separate payments area. LBG's system was heavily reliant on manual processes and data transfers which could not cope with high volumes of PPI payments of varying complexity. There was ineffective tracking of cases through the process and a lack of co-ordination between multiple redress sites. Customers' payment details were subjected to poor data governance and there was a lack of controls, including no control at all for the reconciliation of PPI payments. In addition, parts of the process were under resourced; (3) LBG failed to monitor effectively whether it was making all payments of PPI redress promptly. Nor did it gather sufficient management information to enable it to identify, in a timely manner, the full nature and extent of the payment failings; and (4) LBG's risk governance framework in respect of its process for preparing redress payments to send to PPI complainants was ineffective. An effective risk function would have assisted LBG to identify and address, in a timely way, the systems and controls deficiencies in its process. As a result of these failings, up to 140,209 (24%) customers whose complaints were upheld in full or in part were not paid redress within 28 days of LBG's decision letters to customers. Approximately 87,000 (15%) of these customers had to wait over 45 days, 56,000 (9.7%) over 60 days, 29,000 (5%) over 90 days and some 8,800 (1%) over 6 months (these have subsequently been paid, other than where they involve exceptional customer circumstances and are still being addressed). Although LBG has taken steps to ensure that these customers have not been financially disadvantaged by the delays by paying interest at 8% per annum on the outstanding redress figure where appropriate, the average redress due to each customer was £2,733 and customers wereonvenienced by the delay. When customers telephoned LBG to enquire about the non-receipt of the payments they had been expecting, the deficiencies in its processes meant that LBG was unable to fast-track the payment to the customer, inform them when payment would be made, or explain why it had been delayed. LBG has since completed a comprehensive reconciliation of its PPI redress payments to ensure that all customers due PPI redress have been correctly paid and compensated for any delay in receiving their payment. Once the deficiencies in its process had been identified, LBG quickly conducted the reconciliation review and improved its processes to address the failings identified in this notice, including the rapid implementation of a PPI payment validation tool intended to ensure that any future issues regarding delayed payments are immediately identified and corrected.

On 19 October 2012, the FSA issued a Final Notice to Bank of Scotland. This outlined: the imposition of a financial penalty of £4.2 million pursuant to s206 of the Financial Services and Markets Act 2000 (the Act). Bank of Scotland breached Principle 3 because it held inaccurate records for 250,000 of its Halifax mortgage customers. This was a result of mortgage information and documentation being administered by two separate systems which were not synchronised and, in particular circumstances, required manual updates. The incorrect information was held for considerable periods of time in the period 2004 - 2011 and resulted in Halifax mortgage customers not receiving important updates about changes to their mortgage terms and conditions. 3. As a consequence of the inaccurate information held, the Firm failed to properly apply a Voluntary Variation of Permission (VVOP) by excluding a category of customers who were due redress. The VVOP required BOS to implement a redress programme to make goodwill payments to Halifax mortgage customers in recognition that they may have received potentially confusing information relating to the application of a Standard Variable Rate Cap to their mortgages. 4. The FSA identified this while monitoring a consumer forum website and found a number of instances of customers complaining that they had been wrongly excluded from the redress programme and had not received goodwill payments. The problem was exacerbated when BOS incorrectly contacted 33,700 customers who should not have been included in the programme, and mistakenly made goodwill payments totalling £20.4 million to 22,700 of them. 5. The FSA considers that a financial penalty of £4.2 million (reduced from £6 million after applying a Stage 1 discount) is justified.

1.On 9 March 2012, the FSA issued a Final Notice to Bank of Scotland Plc (the Firm). This outlined the issuance of a public censure made pursuant to section 205 of the Financial Services and Markets Act 2000 for the Firm's failure to comply with Principle 3 of the FSA's Principles for Business during the period January 2006 to December 2008 (the Relevant Period). 2.The FSA has taken this action as a result of the failings of the Firm in relation to its Corporate Banking Division (Corporate) during the Relevant Period. The FSA found Corporate pursued an aggressive growth strategy, focussing on high-risk, sub-investment grade lending and that it did not take reasonable steps to assess, manage or mitigate the risks involved. 3.Corporate did so despite known weaknesses in the control framework, which meant that it failed to provide robust oversight and challenge to the business. It continued to do so as market conditions began to worsen in the course of 2007. Between April and December 2008, the Firm failed to take reasonable care to ensure that Corporate adequately and prudently managed high value transactions which showed signs of stress. 4.This conduct constituted a failure by the Firm to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems, throughout the Relevant Period. 5.A financial penalty proportionate to the misconduct identified would have been both merited and substantial. However in the exceptional circumstances of this case the FSA decided not to impose a financial penalty.

On 25 May 2011 the FSA imposed a financial penalty of £3.5 million on Bank of Scotland Plc (the Firm, or BOS) for a breaches of Principle 3 (management and control) and Principle 6 (customers' interests) of the FSA's Principles for Businesses and associated rules which occurred between 30 July 2007 and 31 October 2009 (the Relevant Period) in relation to its complaint handling arrangements. The Firm agreed to settle at an early stage of the FSA's investigation. It therefore qualified for a 30% (stage 1) reduction in penalty, pursuant to the FSA's executive settlement procedures. Were it not for this discount, the FSA would have imposed a financial penalty of £5million on the Firm. The FSA views the failings as particularly serious because: i)the failings led to a significant number of the Complaints being wrongly decided. The Firm reviewed a sample of 275 of the Complaints about the Investments which it originally rejected (and which were not referred to the FOS). BOS has decided, in 45% of such cases, to overturn the original decision and to now uphold the Complaint. Of the Complaints it will now uphold, 77% were made by inexperienced customers and 55% were from those aged over 60 years. The FSA has conducted it's own review of BOS's complaint decisions and the FSA's findings are consistent with these results; ii)BOS was alerted to concerns about its handling of complaints at an early stage during the Relevant Period as a result of the FOS overturning about 46% of BOS's decisions to reject complaints. Despite this, the Firm failed to take prompt and effective action to address those concerns; and iii)although BOS strengthened its management information and root cause analysis of the Complaints in July 2008, it failed to make sufficient improvements in a timely manner. BOS' failures therefore merit the imposition of a substantial financial penalty. In deciding upon the level of disciplinary sanction, the FSA has taken into account a number of factors, including: i)the actual and potential number of customers placed at risk. During the Relevant Period, 2,592 Complaints were received in relation to the Investments; ii)a large proportion of customers who complained about the advice they were given regarding the Investments were over 60 years of age and/or were inexperienced in investment products; iii)the mis-conduct spanned more than 2 years; iv)to date, £2.4 million in compensation has been paid to customers whose complaint was upheld following a review by BOS of its initial decision to decline the complaint. It is expected that further compensation of around £15 million may be paid; v)BOS has worked in an open and co-operative way with the FSA throughout the investigation. The Firm will review all complaints that it rejected between 1 February 2004 and 31 December 2009 and which were not subsequently referred to the FOS in relation to advice given to customers to invest in any of BOS's retail investment products. BOS has also agreed to proactively undertake a targeted review of its sales of Investments to the 8,000 customers who were classed as having a cautious general approach and attitude to investment risk under its psychometric risk profiling tool in use between 30 July 2007 and 1 March 2010. All customers whose complaint or sale will be reviewed have been identified and BOS will proactively pay compensation where due. BOS has also made changes to its sales process and improved its complaint handling arrangements.

1. On 12 January 2004 the FSA imposed a financial penalty of £1,250,000 on The Governor and Company of the Bank of Scotland (BoS) for breaches of Rules 7.3.2 and 2.1.1 of the FSA's Money Laundering Sourcebook (ML). 2. REASONS FOR THE ACTION Summary 2.1. In early 2002 the FSA conducted a review of anti-money laundering controls at major UK domestic retail firms, including HBOS plc (HBOS). Following the release of the findings of the review in August 2002, the FSA invited all major UK banks to conduct self-assessments of their anti-money laundering controls against those findings. 2.2. On 27 December 2002, BoS reported to the FSA the results of its testing of its ability to retrieve and confirm the adequacy of its customer identification verification records. This testing was also part of BoS's own planned testing of its anti-money laundering controls. The results showed evidence of unacceptably high levels of non-compliance with BoS's record keeping procedures across BoS's Retail, Corporate and Business Divisions, although the problems did not appear in other BoS Divisions. As a result on 14 March 2003 the FSA appointed investigators under section 168 of FSMA. 2.3. The investigation confirmed that BoS was unable to locate and retrieve customer identification records in relation to a significant proportion of accounts across its Retail, Corporate and Business Divisions. 2.4. As a result of the investigation, the FSA has concluded that BoS has contravened Rules 7.3.2 and 2.1.1 of ML. 2.5. In so doing BoS has demonstrated failings that demand a substantial financial penalty. These failings are viewed by the FSA as particularly serious in light of the following factors: (1) The very high failure rate - 55% - that occurred across three of BoS's main business divisions. (2) The widespread nature of the breaches - the absence of effective systems and controls in respect of its record keeping policies and procedures, highlighted by the inability of BoS to determine conclusively the areas in which the breakdowns in record keeping procedures occurred. (3) As a consequence of the widespread failures in its record keeping policies and procedures, BoS was unable adequately to monitor the effectiveness of the customer identification aspect of its anti-money laundering policies and procedures. (4) The widespread nature of the breaches and the high levels of non-compliance in the accounts sampled, together with BoS' size in the retail market in which it operates, meant that there was a serious risk that BoS would not have been able to satisfy any enquiries or court orders from the appropriate authorities seeking disclosure of customer identification evidence. (5) The failings occurred against a background where statutory requirements for firms to have in place anti-money laundering procedures, including procedures to keep records of customer identification documents, had been in place for over eight years and where, in anticipation of the FSA's new powers to make Rules relating to the prevention of money laundering with effect from 1 December 2001, there had been a greatly increased emphasis on preventing the use of the financial system for financial crime. 2.6. The FSA recognises the prompt and effective remedial action undertaken by BoS, the degree of co-operation demonstrated by BoS in relation to the FSA's investigation and BoS's efforts to resolve this matter expeditiously. These factors have resulted in the size of the financial penalty imposed being lower than it otherwise would have been. Facts and Matters Relied On Bank of Scotland's Actions 2.7. BoS is an authorised deposit taking institution undertaking both retail and corporate banking along with a wide range of other permitted activities. It is a wholly owned subsidiary of HBOS. The 2000 Audit 2.8. In September 2000 BoS Group Internal Audit (GIA) found that while know your customer requirements were generally being followed, BoS's record keeping needed to be improved. GIA found that business units were unclear as to what records should be sent for imaging at the Document Reception Centre (DRC), the prime repository of documents used to verify customer identity. 2.9. Following the audit a number of recommendations were made to address the issues, including that completed identification evidence checklists be forwarded with account applications to the DRC, which would monitor their completion. However, the DRC was neither involved in the formulation of the recommendations nor aware of their existence and as a result was not involved in any monitoring of the completed identification verification checklists. The 2002 Review 2.10. In October 2002, BoS's Group Regulatory Risk Department (GRR) undertook a review to 'establish a baseline' for BoS's anti-money laundering identification verification records and to check whether BoS could comply with the range of orders under the Proceeds of Crime Act 2002 (POCA), by retrieving information in a timely manner. The exercise was part of BoS's planned testing and a response to the FSA's review in early 2002. 2.11. The GRR review in October 2002 focused on the BoS identification verification records retained by the DRC for the Retail, Corporate and Business Divisions of BoS. The review found that in 55% of the sample of accounts tested, such records could not be located. 2.12. On 27 December 2002, BoS informed the FSA that the GRR review had suggested that there were difficulties in locating identification verification records for BoS customers of Retail, Corporate and Business Divisions and detailed results of the GRR testing were reported to the FSA on 23 January 2003. 2.13. The FSA considers that the facts and matters described above and the failure rate of 55% demonstrate that BoS did not retain either a copy of the customer's identification evidence nor a record of where a copy of the evidence could be obtained, contrary to ML 7.3.2. 2.14. During December 2002 the Retail, Corporate and Business Divisions of BoS undertook further reviews to confirm whether the results of the GRR testing were accurate. All three Divisions confirmed that there was serious and widespread non-compliance with record keeping requirements. The reasons for the failings were summarised in a HBOS GIA report issued in February 2003. 2.15. The GIA report was graded red, signifying an inadequate control environment. In summary, the report identified that the major failing was the many processes by which customer identification checklists progressed from the point of origination to point of completion of imaging. The report also concluded that there was an absence of effective controls to verify the adequate completion of checklists and that all relevant paper is ultimately imaged. Throughout all Divisions reviewed, there were no instances found of any audit trails to control the movement of paper from the point of origination to the point of processing and on to receipt and subsequent imaging at the DRC. BoS was therefore unable to be conclusive about the exact area(s) in which the breakdowns occurred. 2.16. The FSA considers that the conclusions of the GIA report regarding the reasons for the inadequate record keeping, together with the high proportion of accounts with inadequate records of customer identification evidence, demonstrate that BoS has failed to set up and operate arrangements to ensure that it is able to comply with the rules in ML, contrary to Rule 2.1.1 of ML. Remedial Action undertaken by BoS 2.17. BoS has acknowledged that the rates of compliance with account opening identification and related record keeping procedures in certain parts of BoS were unacceptably low. BoS has implemented action plans to address the shortcomings identified in its record keeping and customer identification procedures. 2.18. In December 2002 each Division was given responsibility to devise a set of initiatives to resolve the problems identified in respect of anti-money laundering record keeping. These initiatives were overseen by GRR and action plans for each Division were developed by the end of January 2003. 2.19. Since January 2003, BoS has regularly reported to the FSA its compliance rates in respect of the ongoing remedial actions. Overall the compliance rates in respect of its customer identification and record keeping procedures have improved considerably. The FSA is satisfied that the remedial action plan has appropriately addressed the problem. FACTORS RELEVANT TO DETERMINING THE SANCTION 2.20. In determining that a financial penalty is appropriate and that the amount imposed is proportionate to BoS's breaches, the FSA considers the following factors to be particularly relevant. The duration, frequency and nature of the breaches 2.21. BoS's GRR review in October 2002 revealed evidence of high rates of non-compliance across BoS's Retail, Corporate and Business Divisions. 2.22. The subsequent review in January 2003 by HBOS GIA revealed that the record keeping breaches were caused by widespread weaknesses in BoS's customer identification record keeping processes, procedures and controls; evidenced (and exacerbated) by the fact that GIA was unable even to determine conclusively the areas in which the breakdowns occurred. 2.23. The widespread nature of the breaches meant that BoS was unable adequately to monitor the effectiveness of the customer identification aspect of its anti-money laundering policies and procedures. 2.24. The widespread nature of the weaknesses and the high levels of non-compliance, together with the size of BoS in the retail market in which it operates, meant that there was a serious risk that BoS would not have been able to satisfy any enquiries or court orders from the appropriate authorities seeking disclosure of customer identification evidence. The FSA accepts, however, that there is no evidence to indicate that any such enquiries or court orders were frustrated by BoS's failings. 2.25. In September 2000, BoS GIA identified problems in respect of customer identification record keeping that were very similar in nature to those problems identified by the BoS GRR review in October 2002. This demonstrates that record keeping problems had existed for at least two years. If the recommendations made following the 2000 Audit had been fully implemented, it is likely that the subsequent problems would not have occurred to the same extent. Conduct following the contravention 2.26. The FSA notes that BoS has devoted considerable resources to the issues identified and promptly and effectively implemented a robust remedial action plan across the whole of HBOS. The FSA is satisfied that the remedial action plan is addressing appropriately the weaknesses identified in BoS's customer identification record keeping processes, procedures and controls. 2.27. BoS afforded the FSA very good co-operation during the investigative phase of this matter, in particular in responding promptly to document requests. BoS also involved GIA to review its document searches to verify that it supplied the FSA with all relevant information concerning its anti-money laundering procedures. 2.28. BoS has taken steps to settle this matter. This has helped the FSA work expeditiously toward its regulatory objectives, which include reducing financial crime. Previous action taken by the FSA 2.29. The FSA has had regard to previous cases involving breaches of ML. The FSA considers that the failure rates in this case are considerably higher than those previous cases. However, the FSA considers that some of the aggravating factors present in those cases are not evident in this case to the same degree. CONCLUSION 2.30. Taking into account the seriousness of the contraventions and the risk they posed, but also having regard to the remedial steps taken and the co-operation shown, the FSA has decided to impose a financial penalty of £1,250,000.

By a Final Notice dated 5 February 2003, the Governer and Company of the Bank of Scotland was fined £750,000 by the FSA. The fine was imposed as a result of the failure of its PEP and ISA Department to administer customer funds appropriately. These breaches related specifically to the firm's failings in the implementation of its LISA PEP and ISA computer system and the transfer of its PEP customers' accounts to that system and in the managementof its PEP and ISA Department. They meant that, throughout the period between November 1999 and August 2001, the firm was unable to reconcile properly the cash it was holding on behalf of its PEP and ISA customers or, therefore, to state accurately how much money it was holding on behalf of those customers.