Tag Archives: FCA

News

Challenger banks need to work on AML and fraud control as they grow

Written by Kunal Sawhney, CEO, Kalkine

UK’s challenger banks have made deep inroads into the financial system of the country. These recently created retail banks have been giving tuff competition to the traditional banks with better digital services and offering a quick and easy application process. These neobanks have disrupted the conventional banks’ business model, and their customer count has witnessed a continuous rise.

The fintech innovation has led to a meteoric rise in the sector in just over a decade, and with ever-increasing fintech adoption among digitally active consumers, the growth is likely to increase further. The process they follow of providing improved customer support without face-to-face interactions has made them popular and lured many to shift to them from the conventional banking system.

When everything was going in favour of the challenger banks, the financial regulator raised an alarm bell. The Financial Conduct Authority (FCA), in its latest review, has said that challenger banks need to work on their process of assessing financial crime risk.

Finding of FCA on challenger banks

FCA review that was conducted last year has identified various Suspicious Activity Reports (SARs) from challenger banks, which has raised concern over the adequacy of checks while onboarding new customers by them. The regulator stated that the procedures for accessing customers’ risks were not developed properly and, in some cases, were ineffective, which made the customer due diligence (CDD) difficult. Also, as some of the challenger banks grew rapidly in the last couple of years, they failed to adjust to the norms. In a competitive rush to attract customers quickly, the information gathered at the primary stage of account opening remains incomplete and insufficient.

It was also pointed out that many of the challenger banks’ management of transaction monitoring alerts, especially for the application of enhanced due diligence (EDD), remained inconsistent and ineffective.

It’s not the first time that concerns have been raised about the functioning and the regulatory procedures followed by the challenger banks. They have been under scrutiny earlier as well by the regulators for reasons as grave as potential breaches of anti-money laundering laws. The regulator has advised them to work on their anti-money laundering (AML) and fraud controls with the growth of their business.

Enough scope of course correction

All is not bad, and the regulator has also identified some good practices like the use of technology in an innovative way to identify and validate customers at speed by the challenger banks. It has termed them as a vital part of the UK’s retail banking offering.

Also, the scope of the FCA review is limited as it was based on a sample selection of 6 challenger retail banks and that too who were relatively new to the market, but still, the challenger banks should consider the findings of this review. The findings indicate that they will have to work on enhancing their own financial crime systems continuously. There is technology available that can help challenger banks to prevent financial crime; they can use AI-based systems to identify fraudulent activities and can act promptly. The neobanks will have to take a risk-based approach to AML and should stringently follow the CDD norms.

Appointments, Business, News

Protect Line Appoints Pedro Coimbra Fernandes as Chief Financial Officer

Award-winning life insurance broker Protect Line welcome Pedro Coimbra Fernandes to their ever-growing organisation as Chief Financial Officer.

Protect Line have grown to 270 employees in 2021 and reported a turnover in excess of £20 million in 2020. The business is also gearing up to become directly authorised with the Financial Conduct Authority (FCA) later this year.

As CFO Pedro will work with Founder-Directors Jo and David Brewer to drive the company forwards and achieve the businesses strategic growth objectives.

Pedro has also held the position of CFO a number of organisations but is well known at AIG (American International Group) where he covered the UK, US, Latin America, Caribbean, Middle East and North Africa, Central and Eastern Europe at various points in his tenure. He has experience of working specifically in the protection market globally gives him a unique insight into the market.

Pedro joins Protect Line from Hiscox LTD, a Bermuda-incorporated insurance provider, listed on the London Stock Exchange where he was Interim Chief Financial Officer of London Market and Hiscox Syndicates Limited.

Pedro has an MSc in International Finance, BA (Honours) in Economics and has studied Executive Leadership at Darden Business School and Said Business School, Oxford University.

Co-Founder and Director David Brewer said; “We are delighted to announce this key appointment to our business. Pedro comes with a wealth of knowledge and experience which we know will be invaluable in achieving our strategic growth objectives. We are looking forward to working with Pedro and helping take Protect Line to the next level.”

Jo Brewer, Co-Founder and Director said; “Pedro joins us at an important point in our growth plan. His pedigree of experience is rare to find the Insurance space, let alone in the life insurance industry. We believe Pedro’s wealth of experience will help us build and refine our structure. His appointment gives us an opportunity to enhance our control of the business growth during this next phase.”

Pedro commented; “I’m delighted to have met David, Jo and some of the wider team already. After working for global PLC’s in leadership roles, I wanted a new challenge. I’m impressed with what Jo and David have achieved at Protect Line already. The foundations of the business give me a great platform to help them achieve their growth plans.”

About Protect Line

Protect Line is one of the UK’s fastest growing Life Insurance Brokers. Established in 2010, the business was the result of pure passion and entrepreneurial drive, underpinned with a core focus on doing the right thing first time, every time. They have protected over 200,000 families with life insurance and protection products.

Their founders have a clear mission which is to protect as many UK families as possible, preventing financial hardship for loved ones left behind. They pride themselves on transparency and simplicity. Clients are provided with honest and impartial information as part of the fee-free service.

Their specialists are based in Bournemouth and London. https://protectline.co.uk