Enforcement action

FCA fines round-up
FCA regulatory fines for 2018 now total  £60.5m. The following fines and related enforcement actions have been announced in the past month:
 

Angela Burns The FCA has banned Angela Burns from acting as a non-executive director (NED) and fined her £20,000 for failing to act with integrity for her failure to declare conflicts of interest at two mutual societies. The publication of the Final Notice follows Ms Burns’ referral of the FCA’s Decision Notice to the Upper Tribunal on 21 December 2012; her subsequent appeal to the Court of Appeal; and the Supreme Court’s denial of her application for permission to appeal on 27 November 2018.

Angela Burns is an experienced UK investment professional and the chief executive of her own investment consultancy. From January 2009 until May 2011, Ms Burns was a NED at two mutual societies and served as the chair of their investment committees. Both mutual societies were seeking investment manager services and looked to Ms Burns for her expert advice and guidance. Ms Burns participated in discussions about Vanguard Asset Management Limited (Vanguard), a well-known US investment manager that had just opened offices in the UK, at both mutual societies. She was simultaneously soliciting work from Vanguard by referring to her NED positions at the Mutual Societies while she was providing them with what they thought was impartial advice. Ms Burns did not, however, tell either mutual society that she was simultaneously seeking consultancy work with Vanguard. 
 
Santander UK plc The FCA imposed a fine of £32.8m for breaches of PRIN 3, PRIN 6 and PRIN 11 related to governance, unfair treatment of customers, failing to act on information appropriately and failing to be open and co-operative in failing to effectively process the accounts and investments of deceased customers.

Santander did not transfer funds totalling over £183m to beneficiaries when it should have done. 40,428 customers were directly affected. Santander also failed to disclose information relating to the issues with the probate and bereavement process to the FCA after it became aware of them.

Santander breached Principle 3 and Principle 6 between 1 January 2013 and 11 July 2016 by failing to take reasonable care to organise and control its probate and bereavement process responsibly and effectively, with adequate risk management systems, and by failing to treat its customers and those who represented them on their death fairly. The systems weaknesses meant that in some cases, funds were held for many years contributing to beneficiaries being deprived of the use of them for a considerable amount of time. In addition, Santander took too long to address the issues within its probate and bereavement process, once it became aware of them, and to commence remediation exercises to transfer funds from affected accounts to beneficiaries.

Since 2015, Santander has carried out remediation exercises, to transfer funds from affected accounts to beneficiaries. These exercises are almost complete and where possible Santander has located beneficiaries and transferred funds to them (or is in the process of doing so).

Santander also breached Principle 11 between 26 November 2013 and 1 May 2015 by failing to disclose information relating to the issues with the probate and bereavement process to the FCA. Santander did not notify the FCA of the nature or extent of the issues it faced, including the numbers of potentially affected customers and assets, and was selective in the information it provided.
Accordingly, Santander’s conduct fell below the standards of openness and cooperation expected of an authorised firm.
 

Decision Notice against former CEO of Sonali Bank (UK) Ltd for AML failings
On 4 December, the FCA published a Decision Notice in respect of Mohammad Ataur Rahman Prodhan, the former Chief Executive Officer of Sonali Bank (UK) Limited (SBUK), fining him £76,400. The Decision Notice, reflects the FCA’s view of what occurred, outlines the reasons for the FCA’s decision to fine Mr Prodhan £76,400 for acting without due skill, care and diligence and for being knowingly concerned in a breach by SBUK of its obligations to maintain effective anti-money laundering (AML) systems.

Mr Prodhan was the senior manager at SBUK with responsibility for the establishment and maintenance of effective AML systems and controls. In the FCA’s view, between 7 June 2012 and 4 March 2014, Mr Prodhan failed to take reasonable steps to assess and mitigate the AML risks arising from a culture of non-compliance among SBUK’s staff. The FCA considers that he failed to ensure that sufficient focus was given to AML systems and controls within SBUK or that there was a clear allocation of responsibilities to oversee SBUK’s branches, and that he failed to appropriately oversee, manage and adequately resource SBUK’s Money Laundering Reporting Officer (MLRO) function.

Mr Prodhan has referred the FCA’s Decision Notice to the Upper Tribunal (the Tribunal) where both will present their cases. The Upper Tribunal will determine what, if any, is the appropriate action for the FCA to take, and will remit the matter to the FCA with such directions as the Tribunal considers appropriate for giving effect to its determination. 

charles.portsmouth@moorestephens.com