Nationwide has been fined £44m by the Financial Conduct Authority (FCA) for “weak” financial crime controls that allowed a serious case of Covid fraud, costing UK taxpayers £800,000. The failures spanned nearly five years, from October 2016 to July 2021.
The FCA said Nationwide was aware that some customers used personal accounts for business activity, breaching its terms, but lacked proper monitoring processes. This enabled a customer to receive 24 fraudulent Covid furlough payments totalling £27.3m over 13 months, with about £26m deposited in just eight days.
While HM Revenue and Customs recovered £26.5m from the fraudster, approximately £800,000 remains unrecovered. The FCA noted red flags were missed, including a 2014 application listing an office as a residential address and multiple address changes, one matching 59,666 other companies.
Therese Chambers, FCA joint executive director, said: “Nationwide failed to get a proper grip of the financial crime risks lurking within its customer base. It took too long to address its flawed systems and weak controls, meaning red flags were missed with serious consequences.”
Nationwide apologised, stating it identified the issues through its own reviews and cooperated fully with the FCA. It has since invested significantly in its economic crime control framework, launching a transformation programme in July 2021 that continued until summer 2024. The fine follows a report showing Covid fraud and errors cost UK taxpayers £10.9bn.
