UK Prudential Regulation Authority Takes Action Against The Former Chief Executive Officer Of Wyelands Bank Plc For Multiple Breaches Of The PRA’s Conduct Rules

The Prudential Regulation Authority (PRA) has fined Mr Iain Mark Hunter, the former Chief Executive Officer (CEO) of Wyelands Bank Plc (Wyelands), £118,808 for breaching three PRA Conduct Rules between 7 March 2016 and 28 May 2020. Mr Hunter failed both to act with due skill, care and diligence, and to take reasonable steps to ensure that Wyelands had adequate systems and controls in relation to the large exposures regime and PRA record keeping requirements. Today’s announcement follows on from the PRA’s decision in April 2023 to publicly censure Wyelands (which entered wind down in March 2020) for significant regulatory failings.

Mr Hunter breached Individual Conduct Rule 2^footnote[1] and Senior Manager Conduct Rules 1^footnote[2] and 2^footnote[3]. As part of the settlement the PRA reached, Mr Hunter has given an undertaking to the PRA that he will not in the future apply for or perform any function in relation to any regulated activity carried on by any authorised person, exempt person or exempt professional firm.

Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA, said:

‘This outcome reflects material breaches of the PRA's Senior Manager Conduct Rules and Individual Conduct Rules. If Senior Individuals fail to meet the Conduct Rules, as Mr Hunter did, it undermines the trust in financial institutions and the wider financial system. Mr Hunter failed to take reasonable steps to ensure that large exposures risks relating to Wyelands’ business were appropriately identified and mitigated, and failed to take appropriate steps to verify the accuracy of statements he made to the PRA. The PRA has taken significant action against Mr Hunter because his management created prudential risks for the firm, threatened its safety and soundness and contributed to the firm’s breaches of a number of PRA rules and regulations.’

Mr Hunter failed to take reasonable steps to ensure that Wyelands:

had adequate systems and controls to identify, assess and manage connected parties’ risks in relation to large exposures;
submitted large exposures returns which properly aggregated its exposures in respect of certain transactions with connected parties;
had a formal and appropriate document retention policy in accordance with the record keeping obligations set out in the PRA Rulebook; and
clearly apportioned responsibility for conducting analysis of Wyelands’ connected parties before March 2019.

As a result, Wyelands breached requirements under the large exposures regime and the Record Keeping part of the PRA Rulebook. Mr Hunter also failed to comply with Wyelands’ internal policy which had been created to mitigate potential conflicts of interest arising from its membership of the Gupta Family Group (GFG) Alliance and failed to take appropriate steps to verify the accuracy of statements he made about Wyelands in two letters he wrote to the PRA.

As Senior Manager Function (SMF)1, CEO of Wyelands, Mr Hunter was responsible for managing the conduct of the whole of Wyelands’ business. Mr Hunter was also Wyelands’ SMF4, CRO, for part of the relevant period with responsibility for the overall management of the risk controls of Wyelands, including the setting and managing of its risk exposures in accordance with the PRA Rulebook. In this CRO capacity, he failed to take reasonable steps to ensure that Wyelands complied with a number of regulatory requirements and standards under the large exposures regime.

Mr Hunter agreed to resolve this matter with the PRA and the overall fine imposed by the PRA is £118,808. Mr Hunter agreed to settle this matter after the end of the discount period and does not qualify for a reduction of 30% in the fine. In accepting Mr Hunter’s undertaking, the PRA has considered the following exceptional factors as particularly relevant: (i) Mr Hunter’s residence outside the United Kingdom; and (ii) Mr Hunter’s acceptance of the failings set out in the Notice and agreement to pay the financial penalty.

Background

PRA Final Notice to Iain Mark Hunter
PRA Final Notice to Wyelands Bank Plc
The Senior Managers and Certification Regime was introduced in 2016 for banking institutions to embed greater individual accountability by ensuring authorised firms allocate clear responsibilities to key decision-makers. Under this regime, firms must allocate ‘prescribed responsibilities’ – specified in the PRA Rulebook – to Senior Managers. The PRA’s latest supervisory statement setting out its expectations and approach to strengthening individual accountability in banking can be located here.
Individual Conduct Rules
The PRA’s Approach to enforcement: statutory statements of policy and procedure, September 2021.
A “large exposure” is defined in Article 392 of Part IV of the EU Capital Requirements Regulation (No 575/2013) (CRR) as a firm’s exposure to a client or group of connected clients where the value of the exposure is equal to or exceeds 10% of the firm’s eligible capital. Article 392 is now incorporated into the PRA Rulebook.
Large exposure limits refers to Article 395 of Part IV of the CRR which stated (so far as relevant): ‘An institution shall not incur an exposure... to a client or group of connected clients the value of which exceeds 25% of its eligible capital...’. Article 395 is also now incorporated into the PRA Rulebook.
The PRA, alongside the FCA, have issued a Discussion Paper on the Review of the SM&CR.

You must act with due skill, care and diligence.
You must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively.
You must take reasonable steps to ensure that the business of the firm for which you are responsible complies with the relevant requirements and standards of the regulatory system.