PRA fines HDI Global SE £4.2m for FSCS reporting failures
The UK Prudential Regulation Authority has fined HDI Global SE £4.165m for persistent miscalculations of compensation scheme levies, underscoring the regulatory priority placed on data integrity for risk assessment.
HDI Global SE, the UK branch of the German insurance group, has been fined £4,165,000 by the PRA for submitting incorrect regulatory data over a three-year period. The errors, which occurred between August 2021 and August 2024, related specifically to the calculation of Financial Services Compensation Scheme liabilities and fee tariffs. Notably, the insurer continued to submit flawed data even when providing purported remediations for its earlier mistakes.
Misreporting FSCS liabilities directly hinders the regulator's ability to identify material risks within the financial system and can result in a firm underpaying the levies that fund the compensation scheme. The PRA determined that prior to the summer of 2023, HDI failed to consult the PRA Rulebook to understand which liabilities are covered. The branch also lacked effective written processes for reliable calculations and suffered from a distinct absence of internal oversight.
For international insurers operating UK branches, the fine illustrates the regulatory expectation that domestic compliance standards must be fully embedded locally, rather than relying on overseas frameworks. Treating regulatory reporting as an administrative afterthought is now viewed as a fundamental threat to prudential oversight. To resolve the issue, HDI has since implemented new remediation initiatives, submitted corrected historical data, and paid the additional levies required by the FSCS.
The final fine was reduced by 30% from an initial £5.95m after HDI qualified for a settlement discount by agreeing to resolve the matter. The insurer also participated in the PRA’s Early Account Scheme, a mechanism introduced in January 2024 that allows investigation subjects to provide a comprehensive, early account of their actions. The PRA credited HDI for producing a detailed account that materially assisted its investigation.
“The PRA relies on firms submitting accurate, complete and timely data to assess risks, monitor compliance, inform prudential decisions, and ensure that FSCS levies are correctly calculated,” said Gareth Truran, Executive Director of Insurance Supervision. “Firms must maintain effective systems and controls to ensure the integrity of data submissions. This is fundamental to achieving the PRA’s safety and soundness objective.”
