This is Nicky, Head of Retail banking at Banque de Chance for 3 years. She’s worked hard to get there and is now overworked with a diary that is out of control. 

And that’s why she didn’t realise the implications of some important  regulatory changes, such as the FCA gaining competition powers in 2015.

One of Nicky’s friends works for Everywhere Bank, a competitor.

Nicky is caught off guard

And accidentally said something that she shouldn’t have.

A couple of months later BDC receives an on-notice letter from the FCA regarding its alleged information sharing with Everywhere Bank.

The letter demands BDC investigate and report their findings back to the FCA.

Banque de Chance has 60 days to respond to the FCA  panic, confusion and stress set in. 

Nicky is in the middle of it all – and is worried about the personal implications.

Banque de Chance submitted a response to the on-notice letter, without investigating adequately, identifying any suspected risks or proposing actions to mitigate risk.

The FCA launched their own investigation.

The regulator found further competition breaches and inadequate systems and controls  unfit. They found Nicky to be neither fit nor proper to hold the position as Head of retail banking.

The bank is fined £180 million and suffers serious reputational damage.

Nicky receives an £80k penalty, is fired by Banque de Chance and is disqualified from carrying out a similar role in the future.

Nicky should have done more to ensure that she knew about the FCA’s competition powers and how they affected her. But of course Nicky isn’t the only one to blame here, Banque de Chance should have made training compulsory.

Having a friend at a competitor isn’t a crime, but it is important to watch the topics of conversation.

If Nicky had fully understood her regulatory obligations she wouldn’t have exchanged commercially sensitive information with a competitor. And that mysterious on-notice letter would have never arrived.

But if it had, Banque de Chance should have planned their response carefully.

Cautionary Tales: The Curious Case of the FCA Letter

A cautionary tale for all legal, risk and compliance professionals.

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