UK watchdog fines Standard Chartered £46.5m

The Prudential Regulation Authority (PRA) has fined Standard Chartered £46.5 million for failings in regulatory reporting governance in relation to a tailored liquidity expectation from the regulator.

The authority said that the London-headquartered bank failed to be “open and cooperative”.

The penalty represents the highest fine dished out by the PRA.

In October 2017, the PRA imposed a temporary additional liquidity expectation on the bank in response to concerns about heightened risk of USD liquidity outflows. This temporary expectation has now been removed.

The UK financial watchdog explained that while the bank’s overall liquidity position remained in surplus to its core liquidity requirements, between March 2018 and May 2019, it made five errors reporting the liquidity metric which meant the PRA did not have a reliable overview of its USD liquidity position.

It said that in relation to one of these errors, Standard Chartered only notified the PRA after a four-month internal investigation into the issue.

The PRA’s probe identified that the UK bank’s internal controls and governance arrangements underpinning its regulatory reporting in relation to the liquidity metric were not implemented or operating effectively.

“We expect firms to notify us promptly of any material issues with their regulatory reporting, which Standard Chartered failed to do in this case,” said Sam Woods, deputy governor for prudential regulation and chief executive at the PRA. “Standard Chartered’s systems, controls and oversight fell significantly below the standards we expect of a systemically important bank, and this is reflected in the size of the fine in this case.”

Standard Chartered said that it accepts the findings of the PRA and that it delayed notifying the regulator of one of the errors. It added that the errors did not impact its overall liquidity position and that the bank has cooperated proactively and fully with the PRA’s investigation, making "significant improvements to and substantial investment in its liquidity and regulatory reporting processes and controls and remains committed to accurate regulatory reporting."

The bank agreed to resolve the matter and therefore qualified for a 30 per cent reduction in the fine. Without the discount, it would have paid £66.5 million.

The investigation found that the bank failed to:

• promptly notify the PRA of one of the miscalculation and misreporting errors, despite having multiple opportunities to do so;
• ensure that its escalation framework for liquidity miscalculations and misreporting was properly embedded within the relevant business area;
• implement a documented policy setting out when liquidity errors or potential liquidity errors should be notified to the PRA;
• maintain and operate adequate controls testing and checks for reporting the liquidity metric;
• ensure that it had appropriate human resources to investigate potential misreporting of the liquidity metric.

    Share Story:

Recent Stories

Meet Evelyn, your Economic Sanctions/PEP/Adverse Media Alert Adjudication Analyst
Meet Evelyn, an Economic Sanctions/PEP/Adverse Media Alert Adjudication Analyst, who uses native AI/ML capabilities to automate the Customer/PEP screening and Negative News screening alert adjudication processes for leading BFS organizations with greater speed, accuracy, and consistency than human analysts.

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.