Release Date: 16th July 2013
To access the original FCA document, click here.
Summary
The Royal Bank of Scotland plc and The Royal Bank of Scotland N.V. (collectively RBS) were fined £5,620,300 by the Financial Conduct Authority (FCA) for failing to accurately report approximately 44.8 million transactions and completely failing to report about 804,000 transactions during the period between November 2007 and February 2013. This conduct represented breaches in the FCA’s Supervision Manual (SUP) rules and Principle 3, which concerns the management and control of a firm’s affairs with adequate risk management systems.
The inaccurate and omitted transaction reports were crucial failures as these reports assist the FCA in detecting and investigating potential market abuse, insider trading, and market manipulation. RBS’s reporting systems were overly complex and fragmented, exacerbated by the integration challenges following the acquisition of ABN Amro in October 2007. Despite significant resources, RBS failed to implement effective transaction reporting systems and controls in a timely manner, which is a breach of the expectation that financial institutions manage their affairs responsibly.
The FCA highlighted the importance of accurate transaction reporting and has provided ample guidance and tools to firms to ensure compliance. The fine imposed on RBS takes into account a 30% reduction due to early settlement by RBS. The original penalty could have been £8,029,100.
The key takeaway for other firms is to ensure robust and effective transaction reporting systems are in place, especially following significant corporate changes like mergers or acquisitions. Firms are urged to actively use tools and guidance provided by the FCA and to prioritise the management of reporting responsibilities to avoid similar punitive measures. This case underscores the FCA’s commitment to enforcing regulations that support the integrity and transparency of the financial markets.
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