The Bank of England (BofE) has sent a warning letter to banks and building societies for not supplying correct information to help regulators identify risks to the financial system.
Prudential Regulatory Authority (PRA)-authorised companies must currently submit complete and accurate regulatory returns on things like capital, assets and operations.
Back in 2019, the BofE sent its first letter to banks and building societies reminding them of these duties.
In this recent second letter, the bank has written to CEOs of banks and building and stated that the central bank was ‘disappointed to find significant deficiencies in a number of firms’ processes used to deliver accurate and reliable regulatory returns’.
The letter went on, “It was clear that multiple firms did not treat the preparation of their regulatory returns with the same care and diligence that they apply to financial reporting shared with the market and counterparties. For some firms, there had been a historic lack of focus, prioritisation, and investment in this area.”
It was also found by the BofE that companies had prioritised the necessary investment in regulatory reporting and had instead focused on ‘tactical fixes’ and relied on ‘significant manual intervention to fill data and system gaps’ which had led to a higher risk of errors.
The firms warned in the letter have been told to fix their issues and warned that ‘where individual firms fall short of our expectations, we will consider the full range of supervisory responses and enforcement powers at our disposal”.
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