So, you’ve just been slapped with a £21m fine by a regulator.
How would you respond?
Would you apologise?
Or would you attempt to draw a line under the issues and show they are in the past?
Well, Monzo took that latter approach. But was it the right crisis comms strategy?
The digital bank made the headlines this week after the Financial Conduct Authority (FCA) fined it for its failures in anti-financial crime measures.
The long-running investigation found Monzo took on customers using “obviously implausible UK addresses”.
These included 10 Downing Street, Buckingham Palace and even Monzo’s business address – the absurdity of which not only makes the compliance look almost non-existent but adds another newsworthy element to the story, propelling it to a wider audience.
The investigation also found instances where Monzo customers were able to register with PO boxes or foreign addresses with UK postcodes.
And of multiple customers being able to use the same address.
Therese Chambers, the FCA’s joint enforcement director, said: “Banks are a vital line of defence in the collective fight against financial crime.
“They must have the systems in place to prevent the flow of ill-gotten gains into the financial system. Monzo fell far short of what we, and society, expect.
“Monzo onboarded customers on the basis of limited, and in some cases, obviously implausible information – such as customers using well known London landmarks as an address.
“This illustrates how lacking Monzo’s financial crime controls were. This was compounded by its inability to properly comply with the requirement not to onboard high-risk customers.”
Damning stuff.
Here is a selection of the headlines created by the investigation’s findings
Embarrassing coverage that shows the real cost of big fines can often be a reputation hit.
But how has Monzo responded?
The bank issued a statement from TS Anil, its chief executive.
In it, he said: “The FCA’s findings relate to a historical period that ended three years ago and draw a line under issues that have been resolved and are firmly in the past – with our learnings at the time leading to substantial improvements in our controls.
“I’m pleased the FCA recognises the significant investments we have made, as well as our ongoing commitment to managing these risks today, as we go from strength to strength as a business approaching 13 million customers. Financial crime is an issue that affects the entire industry – and at Monzo, we have the right team, best-in-class technology and an unwavering commitment to doing all we can to stop it in its tracks.”
What do you think of that from a crisis media management perspective?
While is shows visible leadership. I am amazed by the defiant tone.
No apology or contrition. Just a determination to try to distance itself from issues it wants people to believe are “firmly in the past” and show how well it is doing now.
But surely you must apologise when you have just been hit with a substantial fine for failings as humiliating, incredible and wild as allowing customers to apply with the address of the Prime Minister and the King.
As we often stress during our crisis communication training courses, people need to know that you care about what has gone wrong before they care about what you are now doing differently. And that does not come across here.
Let’s compare Monzo’s response with that of another challenger bank.
Starling was fined £28.96m last October after the FCA described its financial crime controls as “shockingly lax” and said its measures “did not keep pace” with its growing customer base.
David Sproul, Starling’s chairman, said at the time: “I would like to apologise for the failings outlined by the FCA and to provide reassurance that we have invested heavily to put things right, including strengthening our board governance and capabilities. We want to assure our customers and employees that these are historic issues.
“We have learned the lessons of this investigation and are confident that these changes and the strength of our franchise put us in a strong position to continue executing our strategy of safe, sustainable growth, supported by a robust risk management and control framework.”
Similar circumstances, but this response feels so much better.
It starts with an apology and continues to sound remorseful – “We have learned the lessons”.
It also says many of the same things around reassurance and historic issues, but with a lot more subtlety.
Monzo describes itself as “your new favourite bank” and is presented as a tech-savvy alternative to traditional banks.
While the fine may seem like a boring compliance issue, customers being able to apply for accounts using landmarks like Buckingham Palace as their home address - and the resulting coverage – impacts the most valuable commodity of any organisation - trust.
Once it is broken, it can be tough to rebuild.
And that rebuilding process begins with a better response than what we have seen from Monzo.
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