What's happened
The FCA has fined Nationwide £44m for weak anti-financial crime controls between 2016 and 2021. The failure allowed a Covid fraud case where £27.3m was received via personal accounts, with £800,000 unrecovered. Nationwide has since invested heavily in improving its systems.
What's behind the headline?
The FCA's fine highlights ongoing issues in financial crime oversight within UK banks. Despite awareness of risks, Nationwide's delayed response to systemic weaknesses allowed a significant fraud to occur, costing taxpayers nearly £800,000. This case underscores the importance of proactive, robust controls. The bank's voluntary disclosure and subsequent investments suggest a recognition of systemic flaws, but the delay in addressing these issues raises questions about industry-wide vigilance. Moving forward, stricter enforcement and continuous system upgrades are essential to prevent similar breaches. The case also illustrates how financial institutions' internal controls directly impact public funds and trust in the financial system.
What the papers say
Sky News reports that the FCA issued a £44m fine after criticising Nationwide's 'inadequate' efforts at tackling financial crimes, including ineffective policies for monitoring accounts. The Independent emphasizes that the failures spanned nearly five years, with Nationwide aware of some customers using personal accounts for business activity but lacking proper controls. The Guardian notes that the FCA's investigation revealed systemic weaknesses that led to the £27.3m Covid fraud, with HMRC recovering most of the money. All sources agree that Nationwide's delayed response and systemic flaws allowed the fraud to occur, but they also acknowledge the bank's recent investments in strengthening controls and cooperation with regulators.
How we got here
The FCA's investigation found that Nationwide lacked effective policies to monitor personal accounts used for business activity, which led to missed red flags in a major Covid fraud case. The failures occurred from October 2016 to July 2021, prompting the bank to overhaul its anti-fraud systems in 2021.
Go deeper
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The Financial Conduct Authority is a financial regulatory body in the United Kingdom, but operates independently of the UK Government, and is financed by charging fees to members of the financial services industry.
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Nationwide Building Society is a British mutual financial institution and the largest building society in the world.
As of 2024, it serves over 16 million members and operates entirely for their benefit, without shareholders. The society was established..
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