The Financial Conduct Authority (FCA) has fined Bank of Scotland (BoS) £45,500,000 for failures to disclose information about its suspicions that fraud may have occurred at the Impaired Assets (IAR) team of Halifax Bank of Scotland.

BoS identified suspicious conduct in the IAR team in early 2007. The director of the Impaired Asset Team at the Reading branch had been sanctioning limits and additional lending facilities beyond the scope of his authority undetected for at least three years. BOS knew by 3 May 2007 that the impact of these breaches would result in substantial losses to BOS.

Over the next two years, on numerous occasions, BoS failed properly to understand and appreciate the significance of the information that it had identified despite clear warning signs that fraud might have occurred and it was not until July 2009 that BoS provided full disclosure.

In 2017, following an investigation by Thames Valley Police, six individuals were sentenced for their part in the fraud committed through the IAR.

The FCA has noted that commercial lending was and still is largely unregulated in the UK.

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