08Jul

The middle period of June saw the Financial Conduct Authority impose two significant fines on two different banks.

Firstly, a large retail banking group was fined £64,046,800 for failing to treat customers in arrears fairly. As a result of its failings, the group has also been forced to pay around £300 million in redress to around 526,000 disadvantaged customers.

The failings persisted for an extended period between April 2011 and December 2015. Throughout this period, call handlers at the banking group consistently failed to gather adequate information to assess customers’ circumstances and their ability to afford certain levels of payment. The FCA was also concerned that often inexperienced call handlers were signing off payment arrangements without requiring sign off from supervisors.

A skilled person appointed by the FCA to review the banking group’s mortgage arrears handling processes looked at a sample of 100 customer files and identified that there was unfair treatment in 38% of them.

The banking group also failed to maintain adequate records, and, in many cases, its staff could not correctly recognise customer complaints and respond to these appropriately.

Mark Steward, the FCA’s executive director of enforcement and market oversight, said:

“Banks are required to treat customers fairly, even when those customers are in financial difficulties or are having trouble meeting their obligations.

“By not sufficiently understanding their customers’ circumstances the banks risked treating unfairly more than a quarter of a million customers in mortgage arrears.”

A spokesperson for the banking group said:

“We have since taken significant steps to enhance how we support mortgage customers experiencing financial difficulty, including investing in colleague training and procedures.”

Later in the month, the London Branch of a retail bank active in continental Europe was fined £37,805,400 for having inadequate anti-money laundering systems and controls. Again, the failings persisted for a long period, in this case between October 2012 and September 2017.

The FCA says it made the bank aware of its concerns on three occasions during this period, but that the bank failed to take appropriate action. About poor AML and arrears handling.

As a result, by March 1 2017, the due diligence checks on 1,772 clients were overdue, but many of these clients were still able to continue to do business with the bank’s London branch. The bank’s automated system that it used to flag potential money-laundering was missing some 40 high-risk countries and 1,100 high-risk clients.

The FCA enforcement investigation certainly prompted the bank to take action in one sense – in mid-2016, its Financial Crime Team in Compliance consisted of just three full-time employees, but two years later, staffing levels in this business area had risen to 42!

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article.