Nationwide hit with fine after failing to flag Covid furlough fraud
Nationwide had been slapped with a £44m fine by the City watchdog for failures in its financial crime controls.
The building society giant has been blasted by the Financial Conduct Authority (FCA) for missing opportunities to identify fraudulent Covid furlough payments.
The FCA said one customer received 24 payments, totalling north of £27m, over 13 months.
Over £26m of this was deposited over eight days. The HMRC has been able to recover £26.5m from the case, but up to £800,000 remains unaccounted for.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “Nationwide failed to get a proper grip of the financial crime risks lurking within its customer base. It took too long to address its flawed systems and weak controls, meaning red flags were missed with serious consequences.
“Building societies and banks have a key role in the fight against financial crime. Firms must remain vigilant in this fight.”
The mutual was also blasted for “ineffective systems” which did not keep “up-to-date due diligence and risk assessments” on personal current accounts.
During the period which the activity that led to the fine occurred (from October 2016 to July 2021), Nationwide was not offering business accounts. But the mutual failed to identify a number of customers using their personal accounts for business activity, marking a major breach of terms.
The regulator said Nationwide agreed to resolve these matters, which qualified it for a 30 per cent discount on the fine and avoided a near-£63m hit.
The latest current account switching data from Pay.UK showed Nationwide had won big in the mass exodus from FTSE 100 lenders, with the mutual netting net gain of 54,347 customers – topping the list in the three months to June.
FCA dishes out fines in 2025
The hefty fine on the building society marks the latest hit for a financial services firm and follows earlier fines on Monzo and Barclays this year.
Barclays was fined £42m after failings in its financial crime risk management.
Meanwhile, digital bank Monzo was hammered with a £21m fine after “repeatedly” opening accounts for “high-risk” customers, who used 10 Downing Street and Buckingham Palace, and even Monzo’s own address, as their address.
A spokesperson for Nationwide said: “Nationwide identified these issues, which relate to controls in place before July 2021, through its own reviews, and voluntarily brought them to the attention of the FCA. The Society cooperated fully with the FCA investigation, and we are sorry that our controls during the period fell below the high standards we expect.
“Since 2021, Nationwide has invested significantly in all aspects of its economic crime control framework in order to ensure our systems are robust.
“We do not believe that these controls issues caused financial loss to any of our customers and remain committed to preventing economic crime and protecting our customers and the wider UK economy from fraud.”