Credit Strategy – CS – News

The regulator also found that these organizations failed to adequately verify the income and occupation of their clients, and some cases did not have financial crime risk assessments in place for their clients.

During its review – conducted over the course of 2021 – the FCA identified an increase in the number of suspicious activity reports highlighted by challenger banks. This raises concerns about the adequacy of these banks’ controls when accepting new customers.

It found evidence of good practice, such as innovative use of technology to quickly identify and verify customers.

The review focused on challenger banks that were relatively new to the market and offered a quick and easy application process, including six challenger retail banks – which consist primarily of digital banks and cover over eight million clients.

Based on its conclusions, the regulator recommends to these challenger banks its recent strategy defining its expectations in terms of financial services.

In early April, it launched its three-year strategy to “improve outcomes for consumers and in markets across the UK”. it is designed to prioritize resources to prevent serious harm, set higher standards and promote competition.

One of the main goals of the strategy is to shut down problematic businesses that fail to meet basic regulatory standards.

Commenting on her review of the challenger bank, FCA Executive Director of Markets, Sarah Pritchard: “Our three-year strategy highlights our commitment to reducing and preventing financial crime.

“This is important to build that trust for consumers and financial services market participants and to demonstrate that the UK is a safe place to do business. Challenger banks form an important part of the retail banking offering in the UK.

“However, there can be no trade-off between quick and easy account opening and strong financial crime controls. Challenger banks should heed the findings of this review and continue to improve their own financial crime systems to prevent the damage.

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