Speaking in the wake of JP Morgan’s record
£33m fine from the UK Financial Services Authority for
allowing client futures and options money to sit in the same
account as its proprietary funds for nearly seven years, Nelson
said: "It shows that their processes have been shocking for
quite a while. It shouldn’t be that difficult," he
argued. "They’re probably reliant on quite old
Asked how common such failings were, Nelson said: "I think
it’s pretty widespread."
"Ultimately it’s human error, [but] they
didn’t have the processes in place to make sure
those checks were carried out. We’re talking about
billion of dollars of client money here… you need an
efficient approach. Software would be a very good way of making
that happen – the regulator [should be] complied
"Business process management makes that more systematic,"
argued Nelson, saying that far too few money management
processes at banks were automated.
"The other aspect is monitoring," he continued, saying real
time monitoring solutions should be de rigueur. "You
get an early insight into issues. We all expect things to be
done so rapidly these days but I know a bank who only get order
details at the end of each day. And that’s not
good enough. You need it continually. You want to know pretty
much immediately when something’s gone
awry… if you leave something, it’s only
going to get worse."
Asked what share of the blame a bank’s auditor
should take for failing to spot money handling errors, Nelson
was sceptical. "I would say the auditor is there as an
independent organisation to sign off how the bank is running
its affairs. The auditor looks stupid for not spotting it, but
the ultimate responsibility is the bank’s."
Tom Osborn +44 207 779 8361 firstname.lastname@example.org