For the first time, the Bank of England (BoE) is sanctioning a financial infrastructure firm for compliance failures.
The central bank issued an £11.9-million fine against payments system firm Vocalink Ltd. after finding the company failed to fully comply with an order to fix systems and controls issues flagged by the bank by the 2022 deadline it was given.
The bank said its investigation found the underlying cause of the non-compliance “was the failure to have in place a sufficiently integrated risk management framework for the remediation program.”
It also found failures to escalate key risks and information to senior committees, and concluded that the company’s governance arrangements “fell below the standards expected of a financial market infrastructure firm.”
“Vocalink fell short of its obligation to have adequate risk management and governance arrangements when responding to the bank’s direction. Its failure to comply with that direction in full has resulted in a significant fine,” said Sarah Breeden, deputy governor for financial stability at the BoE, in a release.
The firm co-operated with the bank’s investigation and agreed to settle the case, resulting in a 40% discount on the sanctions. Without the discount, the fine would have been £20 million, the BoE said.
The bank also noted the firm has since “invested significantly” in remediating the issues identified in both the initial compliance review and the subsequent compliance failure.