Bank of England hits Mastercard subsidiary with £12m fine
A Mastercard-owned company has been fined almost £12m by the Bank of England after it failed to fully comply with a regulatory order to fix weaknesses in its risk management.
Vocalink – which was acquired by Mastercard in 2017 – has been slapped with the £11.9m fine due to failing to meet directions from the bank by 28 February, 2022. This marks the first time the Bank has fined a financial market infrastructure firm.
The Bank said an ineffective risk management framework, combined with weakness in its controls, governance arrangements and escalation processes meant that Vocalink failed to comply with requirements.
The payment systems firm designs, builds and operates core infrastructure for the UK and other markets.
The root cause of the non-compliance was linked to Vocalink’s failure to have in place a “sufficiently integrated risk management framework”.
Vocalink ‘fell short’
Sarah Breeden, deputy governor for financial stability, said: “Vocalink fell short of its obligation to have adequate risk management and governance arrangements when responding to the Bank’s direction. Its failure to comply with that Direction in full has resulted in a significant fine.”
The Bank of England added Vocalink had failed to escalate key risks and information to senior committees undermining its “ability to fully comply with the direction”.
The firm was also blasted for governance arrangements falling “below the standards expected of a financial market infrastructure firm”.
Due to the company’s co-operation and agreement to resolve the matter, it received a combined 45 per cent reduction. Without reduction, the fine would have stood at £20m.
A Vocalink spokesperson said: “We are pleased to resolve this matter which related to issues identified in 2020.
“Since then, we’ve delivered a number of improvements, as recognised in the Bank’s final notice.
“The historic issues related to internal systems and controls and had no impact on the service we delivered to the UK’s consumers and businesses.”
UK fintech veteran Monzo was also slapped with a fine from the Financial Conduct Authority this week.
The neobank faced a £21m penalty after the regulator found it had approved customers who listed their address as Downing Street, Buckingham Palace and Monzo’s own address.