The Australian Securities & Investments Commission (ASIC) announced today that it accepted a variation to a 2016 enforceable undertaking (EU) by the National Australia Bank Limited (NAB). The amendment adds further undertakings in regards to the bank’s spot foreign exchange business.
Under the original EU, NAB needed to develop a program to prevent, detect and respond to certain types of conduct for its spot FX.
However, an independent expert assessed the implementation of the program and found it had significant deficiencies in multiple areas. As a result, ASIC has imposed further undertakings which states NAB must: “prepare an updated program that adequately addresses all required components.”
The independent expert also said it could not complete the assessment of the program’s effectiveness because NAB has made incomplete progress in designing items to be included in the program.
Initial court ruling
In December 2016 a court order ruled that NAB had flaws in its spot fx business, and as a result, had to develop a program of changes to its existing systems, controls, monitoring, training, and supervision of employees.
Once the program was developed an independent expert was to assess the implementation of the program.
According to the statement, the independent expert who assessed the implementations noted on March 29 this year, that NAB’s spot foreign exchange had significant deficiencies regarding its:
- Governance, Risk Management, and Compliance Framework
- Policies and Procedures
- Risk Management Practices
- Human Resource Management.
The report from the expert stated that “progress in developing the program has been slow” and the program “appears to have evolved iteratively during 2017, rather than through a well-defined process.
“For instance, there appears to have been no comprehensive risk assessment across NAB’s Spot FX business against the EU requirements and relevant regulatory standards and guidance.”
Commenting on the additional undertakings from ASIC, Commissioner Cathie Armour said: “ASIC is disappointed with the delay in the development and assessment of a remediation program to address the conduct outlined in the EU.
“However, we are pleased that the process has been sufficiently robust to ensure any ongoing deficiencies have been identified and are being addressed, with oversight by an independent expert.
“ASIC’s ultimate objective is to ensure NAB has effective mechanisms in place to adequately train, monitor and supervise its employees to provide financial services efficiently, honestly and fairly.”
Once implemented for the second time, the updated program will then be assessed by the independent expert further. When the new undertakings are met, NAB will be able to progress with the undertakings of the original EU.