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Financial Conduct Authority launch regulatory investigation into TSB

15 June 2018

The Financial Conduct Authority (FCA), the UK’s banking regulator, has launched an investigation into the latest banking crisis to affect members of the public, namely TSB customers. Following a transfer of customers' data from an old IT system, millions of people were left without access to their accounts. Over six weeks later some customers are still struggling to make payments and the police have reported vast increases in fraudsters attempting to target TSB customers with 'phishing'.

The CEO, Chairman and Chief Operating Officer of TSB have all been forced to answer questions before the Treasury select committee over the crisis and the way TSB handled the aftermath. Now the FCA investigation will place significant demands on the bank's management time and resources. Ultimately the FCA can bring criminal prosecutions or take other enforcement action including limiting TSB’s ability to operate in the financial services sector. Even if the investigation doesn’t result in enforcement action, the reputational damage of such a public investigation will be a challenge.

This is a further example of an organisation's business practices being scrutinised in a very public arena with an increasing demand for accountability, reparation and evidence of improvement if corporate or individual failures are identified. There is an increasing legislative focus on corporate responsibility and the importance of organisations and employers properly supervising the actions of their employees and indeed third parties with whom they do business.

The Criminal Compliance and Regulatory team regularly advises organisations in connection with the conduct and management of internal investigations and investigations by Regulators.

Not all mismanagement and bad practices are so public. Often issues come to light through whistleblowers or are only identified and rectified following an effective and proportionate internal investigation.

This is invariably business sensitive, any report or documented investigation outcome produced is likely to be publicly disclosed in some form and thus careful and effective preparation of such a report is vital. It forms the foundation of an organisation's defence, justifications or acknowledgement of fault together with remedial actions. Its aim invariably is to give confidence both internally and externally that wrongdoing or failures will not be repeated.

The criminal compliance and regulatory team has brought together the team’s existing skills and investigation experience to develop an internal investigation project management service available to clients who suspect or face allegations of wrongdoing within the organisation.

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