Bank of Scotland plc

1.On 9 March 2012, the FSA issued a Final Notice to Bank of Scotland Plc (the Firm). This outlined the issuance of a public censure made pursuant to section 205 of the Financial Services and Markets Act 2000 for the Firm's failure to comply with Principle 3 of the FSA's Principles for Business during the period January 2006 to December 2008 (the Relevant Period). 2.The FSA has taken this action as a result of the failings of the Firm in relation to its Corporate Banking Division (Corporate) during the Relevant Period. The FSA found Corporate pursued an aggressive growth strategy, focussing on high-risk, sub-investment grade lending and that it did not take reasonable steps to assess, manage or mitigate the risks involved. 3.Corporate did so despite known weaknesses in the control framework, which meant that it failed to provide robust oversight and challenge to the business. It continued to do so as market conditions began to worsen in the course of 2007. Between April and December 2008, the Firm failed to take reasonable care to ensure that Corporate adequately and prudently managed high value transactions which showed signs of stress. 4.This conduct constituted a failure by the Firm to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems, throughout the Relevant Period. 5.A financial penalty proportionate to the misconduct identified would have been both merited and substantial. However in the exceptional circumstances of this case the FSA decided not to impose a financial penalty.