RBS fined £5.6m for misreporting transactions

The bank, which was bailed out by the taxpayer during the economic crisis, was found to have inaccurately reported or have failed outright to report over a third of transactions, according to the city regulator the Financial Conduct Authority (FCA).

The FCA said that RBS misreported 44.8 million transactions between November 2007 and February 2013, and failed entirely to report 804,000 transactions between November 2007 and February 2012.

The FCA said: “This represents 37 per cent of relevant transactions carried out by RBS in this period, and breaches FCA rules on transaction reporting and its requirements for firms to have adequate management and controls.”

According to the FCA, problems with RBS’s own systems were multiplied during the takeover of Dutch bank ABN AMRO in October 2007, but the City regulator stated that given the extensive resources available to RBS, it should have overcome these challenges to guarantee proper controls were in place.

Effective surveillance

The FCA said RBS’s errors were especially disturbing considering it already provides detailed guidance for companies on how to submit and check their reports, and has previously taken action against seven firms, including Credit Suisse and Barclays, for similar reporting blunders. They claim that the size of the RBS fine reflects the gravity of the issue.

In a statement on Wednesday, FCA Director of Enforcement and Financial Crime, Tracey McDermott, said:

“Effective market surveillance depends on accurate and timely reporting of transactions .. As well as a financial penalty, firms can expect to incur the cost of resubmitting historically incorrect reports. We will continue to take appropriate action against any firm that fails to meet our requirements.”

What is a 'transaction report'?
A set of information relating to an individual transaction carried out on a financial market. It includes identifiers of the financial instrument, the firm that undertook the transaction, the counterparty to the transaction and other characteristics such as the buy/sell identifier, price and quantity. 
Most of the errors in the RBS case involved using an incorrect reference code which made it impossible for the FCA systems to identify the counterparties to a transaction. There were also inaccuracies involving the wrong timestamp, incorrect firm reference numbers or venues, incorrect prices and duplicate reporting.
Source: FCA

The FCS has taken action against seven firms including Barclays and Credit Suisse for similar errors in reporting. However RBS has received a 30 per cent discount on its fine – bringing it down from over £8m – because it agreed to settle at an early stage of the investigation.