The Bank of England fines Vocalink Limited £11,900,000 for a compliance failure. This is the first time the Bank has fined a financial market infrastructure firm.

The Bank of England (the “Bank”) has fined Vocalink Limited (“Vocalink”) £11,900,000 in respect of a compliance failure under section 196 of the Banking Act 2009 (the “Act”). „This is the first time the Bank has fined a financial market infrastructure firm.” – accoring to the press release.

Vocalink has been regulated by the Bank since April 2018 as a specified service provider, a type of financial market infrastructure firm involved in the operation of UK payments systems.

Vocalink was required by the Bank to remediate a number of identified systems and controls issues via a direction issued under section 191 of the Act (the “Direction”). Vocalink implemented a remediation programme in response and had until 28 February 2022 to comply with the Direction’s requirements.

However, an ineffective risk management framework, combined with weaknesses in its controls, governance arrangements and escalation processes meant that it failed to comply in full with the Direction’s requirements by the deadline.

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’s investigation identified the root cause of Vocalink’s non-compliance was the failure to have in place a sufficiently integrated risk management framework for the remediation programme. This would have ensured that risks facing the programme could be properly understood, monitored and shared amongst the three lines of defence (and external assurance providers).

It also found there were failures to escalate key risks and information to senior committees, which undermined the firm’s ability to fully comply with the Direction. The Bank considers Vocalink’s governance arrangements fell below the standards expected of a financial market infrastructure firm.

The Firm has invested significantly in remediating the issues which led to both the Direction being issued and the subsequent compliance failure.

Vocalink’s cooperation throughout the investigation, including the early admission of a compliance failure, resulted in a 15% reduction to the penalty. Vocalink agreed to resolve the matter and therefore qualified for a further 30% reduction in the fine. Without these reductions, the fine imposed by the Bank would have been £20,000,000.