The PRA has fined HDI Global SE £4,165,000 for multiple instances of inaccurate reporting of Financial Services Compensation Scheme (FSCS) liabilities and FSCS fee tariff data between August 2021 and August 2024, including defective “remediation” submissions. The case underscores that FSCS data is treated as prudentially critical, and that failures in governance, controls, and technical understanding of PRA Rulebook requirements will be pursued as breaches of Fundamental Rules 2 and 6, with substantial financial and supervisory consequences.
What Changed
- - The PRA has explicitly reinforced that FSCS Liabilities and FSCS Fee Tariff data are core prudential reporting metrics, and misreporting them may both impede risk assessment and cause underpayment...
- The enforcement action clarifies that failures to consult the PRA Rulebook and applicable guidance on FSCS coverage and fee tariff methodologies constitute a breach of Fundamental Rule 2 (due skill,...
- The PRA has signalled that the absence of effective written processes for calculating regulatory data, and lack of clear accountability, internal oversight, and challenge over those calculations,...
- The case demonstrates that remediation submissions are subject to the same accuracy and governance expectations as original returns, and that errors in purported remediation will be treated as...
- The PRA’s Early Account Scheme (EAS), formally incorporated into its enforcement policy in January 2024, is now clearly positioned as a mechanism that can materially reduce penalties where firms...
Suggested Considerations
- Review and map all FSCS Liabilities and FSCS Fee Tariff reporting obligations under the PRA Rulebook and applicable guidance, ensuring the firm’s methodology aligns with regulatory definitions of FSCS-covered liabilities.
- Conduct a detailed end-to-end review of regulatory reporting processes for FSCS data, including data sourcing, calculations, validations, and submission workflows, to identify and remediate control weaknesses.
- Develop and document formal, robust written procedures that govern the calculation and validation of FSCS Liabilities and FSCS Fee Tariff data, including change-control processes for methodologies.
- Assign clear ownership and accountability for FSCS-related reporting within the firm’s governance framework, ensuring named individuals or functions are responsible for accuracy, completeness, and timely submission.
- Strengthen internal oversight, challenge and review mechanisms over prudential and FSCS-related reporting, including regular independent checks by risk, compliance or internal audit.
Key Dates
- Start of the relevant period during which HDI Global SE submitted incorrect FSCS Liabilities and FSCS Fee Tariff data to the PRA
- By this point, HDI Global SE had still not checked the PRA Rulebook or guidance on FSCS coverage and fee tariff methodology, illustrating the duration of governance and diligence failures
- The Early Account Scheme (EAS) becomes part of the Bank of England’s enforcement policy for PRA firms and FMIs
- End of the relevant period of misreporting, including errors in data submitted as purported remediation of earlier incorrect returns
- The Bank of England updates its statutory statements of policy and procedure on enforcement, setting out the PRA’s approach to exercising enforcement powers under FSMA 2000
Compliance Impact
Non-compliance with PRA expectations on FSCS data accuracy and governance can result in multi-million-pound financial penalties, public enforcement action, and findings of breaches of Fundamental Rules, with knock-on impacts on supervisory intensity and reputational risk. Failures may also lead to underpayment of FSCS levies, with potential for backdated levy demands and broader scrutiny of the firm’s prudential reporting framework.