ORX News digests of the month: Q4 2020

Each month, we share a free operational risk loss event story from ORX News. The story is handpicked by the team as one of the most interesting stories reported by the service in the previous month. Read on for all the featured summaries from Q4 2020.

December's story of the month

Bank fined GBP 26.1 million by FCA over poor treatment of customers in arrears

In December 2020, the UK’s Financial Conduct Authority (FCA) fined Barclays Bank £26.1 million ($34.8 million) over its treatment of customers who fell into arrears or experienced financial difficulties between 2014 and 2018.

The FCA found that Barclays had breached the regulator’s Consumer Credit principles by failing to show forbearance and due consideration to business and retail customers when they fell into arrears or suffered financial detriment. Barclays identified at least 1.5 million customers who suffered detriment or were at risk as a result of these failing. Additionally, Barclays knew about many of the shortcomings in its systems and controls as early as 2013, but the failing continued until late 2018.

The FCA said that Barclays had taken significant steps to mitigate the serious structural problems which had led to customers being treated unfairly. Barclays commissioned a consultancy firm to undertake an extensive review of customer files, and dedicated considerable internal resources to addressing the systemic problems. Additionally, Barclays took steps to provide compensation to customers who were affected by the failings by making £273 million in redress payments or balance adjustments to 1.5 million customers.

You can read more on this story here. If your firm subscribes to ORX News, then you can read the full story on the ORX News website. 

Data extract for this story

Every ORX News story is categorised to help you get the most from the data. The categories include the business line, event type and scenario category. All of this information makes it easier for you to use and analyse the loss events.

Business line: Retail Banking
Event type: Clients, Products & Business Practices
Loss amount: GBP 26,056,400
Country: United Kingdom
Scenario category: Improper Business Practice

November's story of the month

Bank accepted a €13.5m administrative fine for failing to submit Suspicious Activity Reports (SARs) in a timely fashion

In October 2020, Deutsche Bank accepted a €13.5m administrative fine for failing to submit Suspicious Activity Reports (SARs) in a timely fashion.

Deutsche Bank allegedly failed to disclose more than a million suspect money transfers with Danske Bank Estonia, for which Deutsche Bank was correspondent bank. The suspect money transfers occurred over a five-year period after a whistle-blower at Danske Bank had flagged them as suspicious transactions. German prosecutors launched an investigation to determine if Deutsche Bank employees had sanctioned these transactions and whether they had subsequently attempted to cover them up.

Deutsche Bank withdrew from its position as a correspondent bank for Danske Bank Estonia over increasing concerns about potential misconduct by Danske Bank and launched two internal investigations into the matter under the scrutiny of US regulators.

Frankfurt Prosecutors cleared Deutsche Bank of money-laundering buy found that between 2010 and 2015, Deutsche Bank had failed to send timely alerts of potentially suspicious transactions to law enforcement authorities on 627 occasions. For each of these failures, Deutsche Bank was fined between €12,500 and €30,000.

You can read more on this story via the source here.

If your firm subscribes to ORX News, then you can read the full story here on the ORX News website. 

Data extract for this story

Every ORX News story is categorised to help you get the most from the data. The categories include the business line, event type and scenario category. All of this information makes it easier for you to use and analyse the loss events.

Business line: Commercial Banking
Event type: Clients, Products & Business Practices
Loss amount: EUR 13,500,000.00
Country: Germany
Scenario category: Improper Business Practice

October's story of the month

Bank ordered to repay millions in interest by FCA over timeshare loans mis-selling

On 4 November 2020, the Financial Times (FT) reported that Barclays had been ordered to repay millions in interest on timeshare loans that were mis-sold in Malta by its subsidiary Barclays Partner Finance (BPF).

Barclays acknowledged in a letter to its borrowers that it had been told by the UK’s Financial Conduct Authority (FCA) to hand back interest charged on loans issued between April 2014 and April 2016.

The FT reports that Azure Resorts, a banking partner of Barclays, was licensed by the FCA to sell loans. However, the employees that brokered the 1400 loans worked for another company, Azure Services, which between April 2014 and April 2016 was operating unlawfully without a broker’s license. BPF was reportedly unaware that Azure Services was acting unlawfully until 24 April 2016. Barclays then applied to the FCA to have these loans “made legal”. The 1444 affected customers appealed against the validation order claiming that they had been mis-sold the loans.

Barclays recognised that, during the relevant period, it did not provide the right level of service for some customers who bought time-share loans via Azure Services. Barclays said it would be contacting all affected customers to explain what this meant for them, and that it had put several new systems, processes, and training in place to prevent any reoccurrence. According to M1 Legal, a Malaga-based law firm representing the borrowers whose cases the FCA reviewed, the repaid and waved interest amounted to an estimated £26 million.

You can read more on this story here.

If your firm subscribes to ORX News, then you can read the full story on the ORX News website. 

Data extract for this story

Every ORX News story is categorised to help you get the most from the data. The categories include the business line, event type and scenario category. All of this information makes it easier for you to use and analyse the loss events.

Business line: Retail Banking
Event type: Clients, Products & Business Practices
Loss amount: Not identifiable
Country: United Kingdom
Scenario category: Retail Mis-selling