Nationwide Building Society has been hit with a hefty fine of £44 million by the Financial Conduct Authority (FCA) for its "weak" financial controls, which failed to detect a serious case of Covid-19-related fraud. The company's lax systems allowed customers to use personal accounts for business activity, despite being aware of this breach in its own terms.
Over nearly five years, Nationwide's failure to address the issue culminated in a customer receiving £27.3 million in fraudulent Covid furlough payments over 13 months. However, the FCA claims that the building society failed to block the account despite numerous red flags, including a suspicious application process and multiple attempts by the customer to disguise their identity.
The FCA has praised Nationwide for acknowledging its failures and taking steps to improve its controls since October 2021. The company has invested significantly in its economic crime control framework and claims that it did not cause financial loss to any of its customers.
However, critics have questioned the timing and extent of these improvements, particularly given Nationwide's significant investment in a £2.9 billion takeover of rival Virgin Money earlier this year. The FCA has welcomed the company's commitment to preventing economic crime but emphasizes that weak controls can have serious consequences for taxpayers.
The fine is just one of several high-profile penalties levied against financial institutions over their handling of Covid-related fraud. As regulators continue to scrutinize these cases, Nationwide and other firms must remain vigilant in their fight against financial crime.
Over nearly five years, Nationwide's failure to address the issue culminated in a customer receiving £27.3 million in fraudulent Covid furlough payments over 13 months. However, the FCA claims that the building society failed to block the account despite numerous red flags, including a suspicious application process and multiple attempts by the customer to disguise their identity.
The FCA has praised Nationwide for acknowledging its failures and taking steps to improve its controls since October 2021. The company has invested significantly in its economic crime control framework and claims that it did not cause financial loss to any of its customers.
However, critics have questioned the timing and extent of these improvements, particularly given Nationwide's significant investment in a £2.9 billion takeover of rival Virgin Money earlier this year. The FCA has welcomed the company's commitment to preventing economic crime but emphasizes that weak controls can have serious consequences for taxpayers.
The fine is just one of several high-profile penalties levied against financial institutions over their handling of Covid-related fraud. As regulators continue to scrutinize these cases, Nationwide and other firms must remain vigilant in their fight against financial crime.
. Nationwide knew about these issues since 2021 and did nothing about it for nearly five years? That's some major red flag right there 
. And now they're trying to act all good and say they've improved their controls, but I'm not buying it 
. It feels like they just wanted to avoid the fine rather than actually fix their problems 
.
. I mean I get it, banks and building societies have got to make a profit but at some point you gotta think about the bigger picture 
. It's like, we're all just stuck in this loop of watching one institution get fined and then another one does the same thing 
. Can't we just do better than that? 
Imagine if that was the amount of funding allocated for our school's extracurricular programs every year... not good. And what really gets me is that they only started addressing this issue after October 2021 
i mean nationwide's got some serious work to do here, it's like they just winged it for 5 years and got caught 
but at the same time, £27.3m in fraudulent payments is NO JOKE 
so yeah, major kudos to nationwide for owning up to their mistakes and making changes, that's all i can ask for 
but still gotta wonder if they're doing enough 
The fact that customers were using personal accounts for business stuff without anyone noticing is wild. And £27.3 million in fraudulent payments over 13 months? Mind blown 
. Like, how did this happen? The FCA is all like "they failed to block the account despite numerous red flags" 
. It's crazy that customers were able to get £27.3 MILLION in fraudulent Covid furlough payments 
. The question is, was this just a coincidence or did they do it for the FCA's sake? And what about that £2.9 billion takeover of Virgin Money... is that related to their improved controls? 
. And now they're claiming it wasn't their fault because they took steps to improve their controls in 2021? Please, that's like saying you can just fix a problem by acknowledging it after the damage is done 
.
. Like, they knew they had a problem with customers using personal accounts for business activity, and yet they didn’t do anything about it? It's like, basic financial controls, right? 
. They did acknowledge their failures and made some changes, which is a good start. And they're claiming they didn't cause any financial loss to customers, so I guess we'll just have to wait and see how this all plays out 
That's a lot of time for customers to get taken advantage of. 
. anyway, gotta give Nationwide some credit for owning up to their errors and making changes since october 2021