One of the conclusions arising from the foreign-exchange rigging scandal was that the regulators such as the Financial Conduct Authority were blind to institutional wrong doing.
This was not the case of an isolated “rogue trader” but was corruption on an industrial scale as witnessed by RBS who in addition to having paid fines to the regulatory body are now investigating up to 50 members of the staff for their part in the market rate rigging between 2008 and 2013.
The integrity and reliability of any organisation’s reporting structure are vital to its long term survival. All too often risk controls are lax or can even be ignored in the pursuit of profits.
It can also prove a false comfort to rely on the findings of the auditors.
As we have seen some of the financial instruments employed by the banks were so complex that even their own architects could not fully understand the full implications.
Even with the most rigorous reporting procedures any company is still heavily reliant on the calibre of the people operating the business and recording each and every transaction diligently.
A prudent exercise for any organisation is to regularly assess and test the systems in place for monitoring risk both transactional and counter party to judge that they are fit for purpose. At long last both the banks and the regulatory authorities are waking up to this.
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