Challenger banks failing on financial crime controls, warns FCA

A review by the Financial Conduct Authority (FCA) has found that there are weaknesses in some challenger banks’ financial crime controls.

The financial watchdog says that challenger banks need to improve how they assess financial crime risk because some are failing to adequately check their customers’ income and occupation.

“Challenger banks are an important part of the UK’s retail banking offering,” said Sarah Pritchard, executive director, market, FCA. “However, there cannot be a trade-off between quick and easy account opening and robust financial crime controls.”

The authority said that in some cases challenger banks did not have any financial crime risk assessments in place for their customers.

The review, which took place last year, also identified an increase in Suspicious Activity Reports reported by challenger banks. The FCA said that this has raised concerns about the adequacy of these banks’ checks when onboarding customers.

The regulator did highlight evidence of good practice from banks that are using technology to identify and verify customers at speed.

It also pointed out that its review focused on challenger banks that are relatively new to the market and offered a quick and easy application process.

This included six challenger retail banks, which are mainly digital, and cover more than eight million customers.

    Share Story:

Recent Stories


New Business Frontiers
FStech’s Mark Evans discusses the future of financial services with Liu Jianning of Huawei, covering the limitations that current thinking can impose, how financial institutions can embrace technology to be both agile and resilient, and making space for the organisation to focus on the job of creating innovative business models and on delivering business value for their customers.

The Future of Intelligent Finance
FStech Group Editor Mark Evans sits down with Jason Cao, President of Global Financial Services Business Unit, Enterprise BG at Huawei ahead of its Intelligent Finance Summit which was held on 3rd and 4th of June in Shanghai. This Q&A delves into key trends in digital transformation of the financial services industry as well as a look at how data, robotic infrastructure, intelligent storage and innovative technologies are shaping the future for FSIs.

Cracking down on fraud
In this webinar a panel of expert speakers explored the ways in which high-volume PSPs and FinTechs are preventing fraud while providing a seamless customer experience.