New banks failing on crime risk

Some new banks are failing to make proper checks on their customers to guard against financial crime, a report has found.

Britain has been encouraging more banks to enter the market to take on HSBC, Lloyds, Barclays and Natwest, the so-called Big Four lenders.

Many of the challengers are online only, serving customers via smartphone apps. They aim to compete with traditional highstreet banks using smarter technology and more up-to-date IT systems. Many are recent entrants to the UK financial markets.

The Financial Conduct Authority (FCA) said it had reviewed six banks with eight million customers and found that some needed to improve how they assess financial crime risk.

Some lenders were failing to check their customers’ income and occupation, the FCA said.

“In some instances, challenger banks did not have financial crime risk assessments in place for their customers,” the financial watchdog said.

The banks should continue enhancing their financial crime systems, the regulator said, without naming them.

The FCA explained: “Our 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.”