Bank money handling “shocking”, says Progress

Bank money handling “shocking”, says Progress

Speaking in the wake of JP Morgan’s record £33m fine from the UK Financial Services Authority for allowing client futures and options money to sit in the same account as its proprietary funds for nearly seven years, Nelson said: “It shows that their processes have been shocking for quite a while. It shouldn’t be that difficult,” he argued. “They’re probably reliant on quite old technology.”

Asked how common such failings were, Nelson said: “I think it’s pretty widespread.”

“Ultimately it’s human error, they didn’t have the processes in place to make sure those checks were carried out. We’re talking about billion of dollars of client money here… you need an efficient approach. Software would be a very good way of making that happen – the regulator complied with.

“Business process management makes that more systematic,” argued Nelson, saying that far too few money management processes at banks were automated.

“The other aspect is monitoring,” he continued, saying real time monitoring solutions should be de rigueur. “You get an early insight into issues. We all expect things to be done so rapidly these days but I know a bank who only get order details at the end of each day. And that’s not good enough. You need it continually. You want to know pretty much immediately when something’s gone awry… if you leave something, it’s only going to get worse.”

Asked what share of the blame a bank’s auditor should take for failing to spot money handling errors, Nelson was sceptical. “I would say the auditor is there as an independent organisation to sign off how the bank is running its affairs. The auditor looks stupid for not spotting it, but the ultimate responsibility is the bank’s.”

Tom Osborn +44 207 779 8361