NatWest Markets Plc

The Prudential Regulation Authority (PRA) issued a Final Notice on 19 November 2014 fining The Royal Bank of Scotland Plc, National Westminster Bank Plc and Ulster Bank Ltd £14,000,000 for failures in IT risk management between 1 August 2010 and 10 July 2012. The PRA found the Group‑wide Technology Services function did not manage or plan changes to IT systems adequately, the IT-specific 'three lines of defence' did not control IT risks effectively, and the group had a limited understanding of IT operational risk. The breach was of the FSA’s Principle 3 (now PRA Fundamental Rule 6) — i.e. the requirement to have adequate systems and controls to identify and manage risks. The FCA register records this action on 5 February 2016.

On 20 November 2014 the FCA fined Royal Bank of Scotland, NatWest and Ulster Bank £42 million for the IT meltdown of June 2012, when a software compatibility problem in the banks' systems left more than 6.5 million UK customers unable to use online banking, see accurate balances at cash machines or make payments — in some cases for several weeks. The FCA found the immediate cause was a software compatibility problem, but the underlying failure was that the banks had not put in place adequate systems and controls to identify and manage their exposure to IT risk, breaching the rule that firms must organise and control their affairs responsibly. The banks settled at an early stage and received a 30% discount. In the first joint enforcement action of its kind, the Bank of England's Prudential Regulation Authority separately fined the banks £14 million for the same incident, taking the total to £56 million.

On 12 November 2014 the FCA fined The Royal Bank of Scotland £217 million as part of a record £1.1 billion settlement with five banks (RBS, Citibank, HSBC, JPMorgan Chase and UBS) over failings in their spot foreign exchange trading. Between 1 January 2008 and 15 October 2013 ineffective controls allowed traders to share confidential information about client orders in chat rooms and coordinate their trading to manipulate benchmark exchange rates, putting the banks' interests ahead of their clients and the wider financial system. RBS settled early and received a 30% discount; without it the fine would have been £310 million. The bank also paid $290 million to the US Commodity Futures Trading Commission the same day, suspended three employees and launched a review of the conduct of more than 50 current and former traders.

On 6 February 2013 the Financial Services Authority (the FSA) imposed a £87.5m penalty on The Royal Bank of Scotland plc for misconduct relating to LIBOR. The FSA found that between January 2006 and March 2012 RBS breached Principle 3 (firms must establish and maintain adequate risk management systems and controls) and that between October 2006 and November 2010 it breached Principle 5 (firms must observe proper standards of market conduct). The final notice says RBS sought to manipulate Japanese yen and Swiss franc LIBOR submissions and to influence other banks’ JPY submissions to benefit its derivatives and money‑market trading books, and that RBS did not have adequate systems and controls for its LIBOR submission process until March 2011, with initial measures remaining inadequate.

On 11 January 2011 the FSA fined Royal Bank of Scotland Plc and National Westminster Bank Plc £2,800,000 for failings in complaint handling by their RBS UK Retail branch network between 1 December 2008 and 25 March 2010. The firms breached Principle 3 (management and control — firms must organise and control their affairs responsibly) and Principle 6 (customers' interests — firms must pay due regard to customers' interests) and qualified for a 30% early‑settlement discount (the undiscounted penalty would have been £4,000,000). The FSA found monitoring focused on process not customer outcomes, poor quality investigations and guidance for complaint handlers, weak use of Financial Ombudsman Service decisions, delays in responses and correspondence that did not fully address customers' concerns. The notice records that the firms cooperated, engaged a skilled person review, increased use of specialist handlers and reassessed complaint files; no further remedies or appeals are specified in the text provided.

On 2 August 2010 the Financial Services Authority (the FSA) fined four members of the Royal Bank of Scotland Group £5,600,000 for breaches of the Money Laundering Regulations 2007 that took place between 15 December 2007 and 31 December 2008. The breaches were failures in systems and controls to prevent breaches of UK financial sanctions: RBSG did not adequately screen incoming cross‑border payments (and certain sterling and euro payments), missed the majority of trade‑finance SWIFT messages, failed to record and continuously screen directors and beneficial owners, and did not maintain effective ‘fuzzy matching’ parameters in its screening software. RBSG agreed an early settlement so qualified for a 30% (Stage 1) discount (the penalty would otherwise have been £8,000,000); once current management identified the problems they reported them to the FSA, implemented remedial screening and governance improvements and cooperated with the investigation.

On 12 December 2002 the FSA fined the Royal Bank of Scotland plc £750,000 for widespread failures in anti‑money‑laundering checks when opening retail accounts. An FSA investigation of 181 accounts opened between January and May 2002 found 89 files lacked sufficient evidence that the customer was who they claimed to be (breaching Rule 3.1.3, which requires firms to obtain sufficient evidence of identity) and seven files where RBS could not supply copies or details of the identity documents used (breaching Rule 7.3.2, which requires firms to retain such records) — two files breached both rules, giving 94 problem files in total. The FSA noted RBS had detected KYC weaknesses itself in December 2001, implemented a remedial plan that reduced failures from April 2002, and co‑operated fully with the investigation; the regulator said those factors materially reduced the size of the penalty.