A UK regulator has instructed JP Morgan to review its approach to risk management amid a crackdown on reporting procedures of banks.
The Prudential Regulation Authority (PRA) told JP Morgan to commission a section 166 review to analyse the accuracy of its reporting, inside sources told Bloomberg. Such reviews allow regulators to make firms appoint a third party consultant to assess company processes which can result in reports recommending sweeping changes.
It comes after the PRA, which supervises UK banks, warned the sector in January that it would increase its use of section 166 reviews. The Bank of England’s PRA had previously told banks that firms were not treating the preparation of their regulatory returns with adequate care and diligence.
In the three months ending in February 2022 the PRA commissioned 11 skilled person reviews into banks and building societies, up from just one section 166 review in the same period a year prior.
The cost of a skilled person review ranged from £86,000 pounds and £4.2m between 2019 and 2020, according to Bloomberg.
The regulator ordered a section 166 review into HSBC’s credit risk reporting in February this year.
The PRA declined to comment when approached by City A.M.. JP Morgan did not respond to a request for comment by press time.
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