UK regulator, The Financial Conduct Authority (FCA) recently fined Metro Bank £10 million and censured two of its former executives after they found it had misled investors on an important risk measure ahead of a 39% collapse of the retail banks’ share price. The decision has drawn a line under a reporting scandal that is now four-year-old.
British investors often seek out independent financial advice in Chester, London and other UK cities for an impartial view on decisions regarding the assets they hold. As independent financial advisors (IFAs), wealth managers are often relied upon for unbiased advice on the risks and returns involved with making investments.
The FCA stated that knowingly, Metro Bank had published a figure that was incorrect for its risk-weighted assets in a trading update issued back in October 2018. This dedicated risk measure, the FCA commented, was a vital input to the financial institution’s capital adequacy. When Metro Bank confessed to the £900 million error, mostly connected to the riskiness of its buy-to-let and commercial property portfolios, shares plummeted by 39%.
Commenting on the issue, Marks Steward, head of enforcement for the UK financial watchdog said:
“Listed firms must ensure that the information they are disclosing to the market is right. This is what investors are entitled to receive.”
According to the FCA, former chief executive for Metro Bank, Craig Donaldson, and its former CFO David Arden were aware that the risk-weighted assets figure was incorrect and fined them respectively £223,100 and £134,600.
