FCA slaps £5.6 million fine on RBS for transaction reporting failures

FCA slaps £5.6 million fine on RBS for transaction reporting failures

The Royal Bank of Scotland (RBS) has been fined £5.6 million by the Financial Conduct Authority (FCA) for incorrectly reporting transactions 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., says the FCA.

Many of the problems with RBS' own systems were compounded by the takeover of ABN Amro Bank in October 2007. However, the FCA considers 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.

Most of the errors involved using an incorrect reference code which made it impossible for the FCA systems to identify the counterparties to a transaction. Other inaccuracies included using the wrong timestamp, firm reference number or venue; incorrect prices; duplicate reporting; incorrect identifier and vague descriptions for OTC derivatives transactions.

Tracey McDermott, the FCA's director of enforcement and financial crime, says: "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."

She says the size of the penalty reflects the serious nature of the issue.

RBS agreed to settle at an early stage of the investigation, and received a 30% reduction of the fine. Without this discount, the financial penalty would have been £8,029,100.

Comments: (1)

A Finextra member
A Finextra member 25 July, 2013, 10:20Be the first to give this comment the thumbs up 0 likes

This article states that “Most of the errors involved using an incorrect reference code which made it impossible for the FCA systems to identify the counterparties to a transaction.”

Two very large banks that I have spoken to have said that they each operate over 4,000 systems – that’s systems – for identifying clients, counterparties and service providers.  The KISS rule of reality says that the more systems and complexity you have, the more likely you are to get things wrong.

If anything speaks in favour of having a simple, unified system of unique entity identifiers to be used by all financial institutions and market regulators, this has to be an important example.  Bring on the Global Legal Entity Identifier System!