Barclays has been fined a record £38m for intermingling billions of pounds of client money with its own.
The penalty, announced by the Financial Conduct Authority today, is the second punishment the bank has received for breaching rules on client assets after it was fined £1.1m in 2011.
The City regulator said Barclays' investment arm had failed to keep its clients' assets separate from its own, putting £16.5bn of client money "at risk" between November 2007 and January 2012.
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The bank says that none of its customers lost out and that it did not make a profit from the issue, which existed before January 2012, but the FCA said clients "risked incurring extra costs, lengthy delays or losing their assets if Barclays had become insolvent".
David Lawton, FCA's director of markets, added that Barclays' "lack of focus on the rules was unacceptable".
Barclays accepted the FCA's findings and said it has since "enhanced its systems to resolve these issues and to ensure we have the requisite processes in place".
Today's fine is the biggest ever issued for this particularly offence, says the BBC, surpassing the £33.3m punishment handed out to JP Morgan in 2010.
The Financial Times says it understands that Barclays was granted a discount of around 30 per cent on the fine for co-operating with the FCA's investigation.
The FCA has insisted that customers' money is kept separate from banks' own assets following the 2008 collapse of Lehman Brothers when many of its clients were unable to access their money.
The fine marks the latest setback for Barclays in its attempt to clean up its reputation in the wake of the 2012 Libor rigging scandal. Antony Jenkins, chief executive since August 2012, is currently attempting to defend the bank against fraud charges in the US relating mortgage bond sales, while the bank also faced a £26m fine in May for fixing the price of gold.
