U.K. Regulator Fines RBS £5.6 million for Incorrect Reporting

The Royal Bank of Scotland (RBS) has been fined £5,620,300 by the Financial Conduct Authority (FCA) for incorrectly reporting transactions they made in wholesale markets, and in some instances, failing to report transactions at all.

RBS failed to properly report 44.8 million transactions between November 2007 and February 2013; and failed altogether to report 804,000 transactions between November 2007 and February 2012. This represents 37% of relevant transactions carried out by RBS in this period, and breaches FCA rules on transaction reporting and its requirements for firms to have adequate management and controls.

The FCA first approached RBS in 2010 requesting the bank to review its failures in transaction reporting. This brought further issues to light and the bank was asked to take remedial action.

Many of the problems with RBS’ own systems were compounded by the takeover of ABN Amro Bank in October 2007. The FCA said that, given the considerable resources available to RBS, it should have been able to overcome these challenges and ensure adequate systems and controls were in place.

A spokesperson for the FCA press office said: “Problems with the RBS systems were further compounded by the acquisition of the ABN Amro systems. There are two separate issues: – the issue of misreporting which often mean putting the wrong code in to identify who actually traded and then some in stances of not reporting. In getting them to do the review – these are complicated and expensive systems and they were working on bringing them altogether. Over time that uncovered things that needed to be dealt with as they were found.

The spokesperson said that following the acquisition RBS had 38 different smaller transaction recording systems, which were involved in feeding data through to three legally defined reporting mechanisms. “They have 38 systems to record things through and three different ways of reporting – it was far too complex and in reviewing the whole thing they reported

“There can often feel like there is a slight lag in terms of us announcing action and us finding action and that’s purely an essence of down to the time it took and complexity of the systems and the time it took to sort if out.”

A statement from the RBS press office said: “RBS fully cooperated with the regulator throughout the investigation. We regret the failings that were uncovered and have subsequently made significant investments in our systems and controls in this area.”

Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “Effective market surveillance depends on accurate and timely reporting of transactions. We have set out clear guidance on transaction reporting, backed up by extensive market monitoring, and we expect firms to get it right. As well as a financial penalty, firms can expect to incur the cost of resubmitting historically incorrect reports. We will continue to take appropriate action against any firm that fails to meet our requirements.”