The Bank of London and its parent group Oplyse Holdings have been fined £2 million by the Bank of England's Prudential Regulation Authority, while Direct Line's main underwriting subsidiary, UK Insurance Limited, has been fined £10.6 million. The PRA said this is the first time it has fined a firm for failing to conduct its business with integrity. The breaches warranted a penalty of £12 million for Bank of London, but it was reduced to £2 million because the companies demonstrated that a higher penalty would cause serious financial hardship. The regulatory breaches occurred between October 2021 and May 2024.
The current bosses at Bank of London said the breaches took place under previous ownership and management. Bank of London was launched in 2021 with an £820 million valuation. Bank of London's losses widened to almost £24 million in 2024, according to its latest accounts. Peter Mandelson was the group's deputy chairman until 2024 when he left in a boardroom exodus after the fintech start-up ran into trouble.
UK Insurance Limited misstated its balance sheet during 2023 and 2024, overstating its financial strength to the PRA and the wider financial market. The PRA attributed the errors to ineffective preventative and detective controls and resourcing issues across UKI's finance and actuarial operations.
The penalty was initially set at £21.3 million but was reduced by half under the early account scheme, acknowledging Direct Line and UKI's prompt admission and swift actions to resolve the matter. This was the first case to make use of the early account scheme, according to the PRA. Direct Line alerted the stock market in 2024 when it found the errors and reported the correct figures.
Direct Line was acquired by Aviva for £3.7 billion last year. Aviva said it was fully aware of this matter prior to agreeing to the acquisition of Direct Line Group and the outcome is fully provided for in the acquisition balance sheet.