Energy regulator Ofgem has fined Morgan Stanley & Co. International (MSIP) £5.41 million for failing to record and retain electronic trading communications.
The fine has been levied after an investigation found that wholesale energy traders at the bank had been communicating via WhatsApp about energy market transactions. This took placed between January 2018 and March 2020.
According to the energy regulator, this is the first-ever fine issued in Great Britain under legal requirements to record and retain electronic communications relating to trading wholesale energy products – a rule that falls under the REMIT Enforcement Regulations.
These rules are designed to protect consumers and ensure market transparency and integrity by providing Ofgem the powers to investigate and sanction against market manipulation and insider trading.
Ofgem’s power to investigate found that MSIP had policies in place which prohibited the use of WhatsApp for trading communications but the organisation did not take sufficient reasonable steps to ensure compliance with its own policies and the requirements of the regulations.
Following these allegations, MSIP admitted to the breaches and said it had “taken steps to ensure the breaches do not happen again, including enhanced staff training and the strengthening of its internal systems and controls”.
“This fine sends a strong message to market participants that they must comply with all REMIT rules or face enforcement action,” said Cathryn Scott, regulatory director of enforcement and emerging issues at Ofgem.
“It is unacceptable that MSIP failed to prevent electronic communications which could not be recorded or retained. It risks a significant compromise of the integrity and transparency of wholesale energy markets. We welcome the steps MSIP has taken to ensure the breaches do not happen again.”
Yesterday (22 August) Ofgem called on OVO Energy to improve its customer complaints service after “serious concerns” were raised. This was primarily due to extended waiting periods and unresolved customer complaints.
