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A London tribunal has ruled that Metro Bank’s former top two executives were responsible for a £900mn accounting error at the UK high street lender.
Craig Donaldson, Metro’s ex-chief executive, and David Arden, former chief financial officer, had challenged fines handed to them by the Financial Conduct Authority in 2022 for allegedly misclassifying a large number of commercial loans.
The Upper Tribunal, which deals with appeals against the UK financial regulator’s decisions, found the two men were “knowingly concerned” in Metro’s breach of FCA listing rules after the company published inaccurate information about its loans and other assets.
The tribunal rejected the argument of Donaldson and Arden that they were not at fault because they had taken legal advice and had informed the Bank of England’s Prudential Regulation Authority and Metro’s board about the information.
The tribunal judge, Anne Redston, reduced Donaldson and Arden’s fines by 25 per cent to £167,325 and £100,950, respectively — finding they did not gain financially from the breach of FCA rules and had no prior disciplinary record.
Metro in early 2019 disclosed its £900mn accounting error, which mostly related to the riskiness of its commercial property and buy-to-let loan portfolios.
The company’s growth took a hit after the discovery of the major miscalculation — which meant the lender did not have enough regulatory capital — and Metro was fined a total of £15mn by the FCA and the PRA.
The FCA fined Donaldson and Arden after they had stepped down from the bank in 2022.
The tribunal noted the pair had not acted recklessly, but it said Arden was “often reluctant to give straightforward answers on key evidential points”, and that both men’s memories had been “revised”, although not in a deliberate attempt to mislead.
Donaldson and Arden said their challenge to the FCA fines had been “vindicated”.
“The Upper Tribunal held the FCA’s original penalty was disproportionate and wrong. It reduced the penalty substantially. The FCA failed to recognise the genuine effort directed towards resolving the issue at the time and our co-operation,” they added.
“The Upper Tribunal agreed that there was no recklessness . . . We believed that we acted correctly, with the input and advice of others, but we respect the tribunal’s decision that a mistake was made.”
Steve Smart, FCA executive director of enforcement and market oversight, said: “Investors make decisions based on information shared by listed companies. They must be able to trust it’s accurate. Mr Arden and Mr Donaldson allowed information they knew to be wrong to be published.”
