Skip to content

News

FCA review finds weaknesses in some challenger banks’ financial crime controls

FCA proposes stronger protection for consumers in financial markets
Facebook
Twitter
LinkedIn

A review by the FCA has found that challenger banks need to improve how they assess financial crime risk, with some failing to adequately check their customers’ income and occupation. In some instances, challenger banks did not have financial crime risk assessments in place for their customers.

The review, conducted over 2021, identified a rise in the number of Suspicious Activity Reports reported by challenger banks, raising concerns about the adequacy of these banks’ checks when taking on new customers.

Challenger banks aim to compete with traditional high street banks using smarter technology and more up-to-date IT systems. Many are recent entrants to the UK financial markets, with online only business models and offering financial services through smartphone apps.

The FCA’s review during 2021 found some evidence of good practice, for example innovative use of technology to identify and verify customers at speed.

The review focused on challenger banks that were relatively new to the market and offered a quick and easy application process. This included 6 challenger retail banks, which primarily consist of digital banks and covering over 8 million customers.

Firms should also review our recent strategy setting out our expectations for financial services.

Sarah Pritchard, Executive Director, Markets at the FCA said: ‘Our 3-year strategy highlights our commitment to reducing and preventing financial crime. This is important in creating that confidence for consumers and market participants in financial services and in demonstrating that the UK is a safe place to do business.

Challenger banks are an important part of the UK’s retail banking offering. However, there cannot be a trade-off between quick and easy account opening and robust financial crime controls. Challenger banks should consider the findings of this review and continue enhancing their own financial crime systems to prevent harm.’

 

Source: FCA

Facebook
Twitter
LinkedIn

Related Posts

FCA CEO letter

The FCA’s latest ‘Dear CEO’ letter – Key priorities for payments firms

The Financial Conduct Authority (FCA) has issued a new ‘Dear CEO’ letter (dated 3rd February 2025) outlining its priorities for firms within the payments sector. This follows the previous letter
Read More >
FCA

The FCA’s new portal for simplified access and reporting

The Financial Conduct Authority (FCA) is set to launch My FCA in spring 2025, a new online portal designed to streamline regulatory reporting and access for firms. This initiative is
Read More >