Bank of Scotland (BOS) has been fined £45.5m by the FCA for failing to disclose information about its suspicions of fraud.
The bank failed to disclose information about its suspicions that fraud may have occurred at the Reading-based impaired assets team of Halifax Bank of Scotland in early 2007.
Lynden Scourfield, the director of the impaired asset team at the Reading branch, had been sanctioning limits and additional lending facilities beyond the scope of his authority undetected for at least three years.
By 3rd May 2007, BOS knew that the impact of these breaches would result in substantial losses.
BOS only provided the Financial Services Authority (FSA) — the regulator at the time — with full disclosure in relation to its suspicions two years later in July 2009.
The FCA claimed that there was insufficient challenge, scrutiny or inquiry across the organisation and at no point was all the identified information properly considered.
In 2017, six individuals, including Lynden Scourfield, were sentenced for their part in the fraud committed.
The FCA has now found that BOS failed to be open and cooperative and failed to disclose information appropriately to the FSA.
The FCA has also banned four individuals from working in financial services due to their role in the fraud at HBOS Reading.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Bank of Scotland failed to alert the regulator and the police about suspicions of fraud at its Reading branch when those suspicions first became apparent.
“BOS’s failures caused delays to the investigations by both the FCA and Thames Valley Police.
“There is no evidence anyone properly addressed their mind to this matter or its consequences.
“The result risked substantial prejudice to the interests of justice, delaying scrutiny of the fraud by regulators, the start of criminal proceedings as well as the payment of compensation to customers.”
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