9/4/2026 10:35:22 AM | 5 minute read

Notice in a Nutshell: PRA fines HDI Global SE £4,165,000 for inaccurate PRA and FCA reporting

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Katie Stephen

Partner

Get in touch

Katie Stephen

Partner

On 16 July 2026, the PRA published a Final Notice imposing a £4,165,000 penalty on HDI Global SE (HDI Global or the Firm) for breaches of Fundamental Rule 2 (due skill, care and diligence) and Fundamental Rule 6 (organise and control affairs responsibly and effectively). The breaches arose from materially inaccurate reporting of data to the PRA and FCA on at least 11 occasions between August 2021 and August 2024.

This is the second case where a firm has participated in the PRA’s Early Account Scheme (EAS) under the PRA’s revised approach to enforcement published in January 2024. (See our “what you need to know” briefing here for more detail on the PRA’s revised enforcement approach). Key takeaways are as follows:

Key takeaways

Settlement discount and the Early Account Scheme: A high-quality factual account alone is insufficient for an enhanced discount; early admissions of breach are also required. HDI Global participated in the EAS and produced an account described by the PRA as “fulsome and candid” and “detailed and thorough”. However, despite making candid admissions of fact, the Firm did not make early admissions of potential rule breaches and so did not qualify for an enhanced settlement discount (above 30%) under the PRA’s settlement policy. The standard 30% discount was applied (reducing the penalty from £5,950,000 to £4,165,000).
Materiality of reporting errors: Errors were material given their scale (FSCS liabilities increased from £20m to £196m on correction). The Firm’s own attempts to correct its data were themselves incorrect as it mistakenly believed it had over-reported and submitted lower figures excluding compulsory insurance. A separate error (proceeding on the incorrect assumption that certain income should be reported net of reinsurance) persisted until identified by an independent adviser in June 2024.
Senior management accountability: The PRA expects firms to assign clear ownership of regulatory reporting obligations and implement documented policies and procedures. The PRA criticised the absence of effective senior oversight. Senior individuals were aware that no written procedure existed for FSCS liabilities calculations but failed to address this. There was no clear accountability between Finance and Compliance, no effective challenge function, and no audit process to verify past calculations.
Prompt escalation to the regulator: Firms should not wait for the next scheduled supervisory engagement to raise a material issue. Once the Firm established on 9 October 2023 that both its original submissions and its purported corrections were wrong, it did not disclose this information until a pre-arranged supervisory meeting on 25 October 2023. Material reporting errors should be escalated to the PRA proactively and promptly on discovery, rather than being deferred to routine touchpoints.

Obtaining external advice: Firms should seek appropriate advice when issues are first identified. HDI Global did not seek legal advice until the PRA requested it. When sought, the instructions were narrow, expressly excluding overall FSCS calculation methodology (including RNPI calculation) meaning a particular error persisted for a further eight months.

Decision maker	PRA settlement decision makers.
Firm	HDI Global SE (Firm Reference Number 230072) - UK branch of a global insurance company headquartered in Hanover, Germany; dual-regulated by the PRA and FCA.
Related material	None.
Sanction	Financial penalty of £4,165,000 (after application of 30% standard settlement discount and 15% reduction for mitigating factors).
Settlement	Yes - standard 30% discount applied. No enhanced discount was available as the Firm did not make early admissions of potential rule breaches.
Provisions	Fundamental Rule 2: “A firm must conduct its business with due skill, care and diligence.” Fundamental Rule 6: “A firm must organise and control its affairs responsibly and effectively.”
Relevant period	13 August 2021 to 31 August 2024
Factual findings	The Firm was required to report data concerning the amount which could be claimed by eligible claimants from the FSCS (its FSCS Liabilities) to the PRA and the FCA . Absence of documented procedures Throughout the Relevant Period, the Firm had no written policies or processes for calculating its FSCS Liabilities . Senior managers were aware of this. The only document pre-dating August 2024 was a procedural note outlining the process for submitting data to the FCA with no senior management sign-off and no reference to calculation methodology. Initial inaccurate submissions (February 2022 – May 2023) In February 2022, the Firm provided incorrect data to the PRA. In May 2022 and May 2023, it submitted inaccurate data to the FCA. The Finance function performed the calculations with no Compliance involvement or effective senior oversight. The “Initial Alleged Over-reporting” (August 2023) In late July 2023, the Firm responded to a PRA request on the basis of an incorrect belief that it had previously over-reported to the FCA because compulsory insurance policyholders with turnover over £1 million could be excluded. Without seeking any professional advice, the Firm submitted revised data to the PRA and FCA. The PRA found no over-reporting had occurred. Further incorrect “remediation” submissions (September – October 2023) In September and October 2023, the Firm submitted further revised data to the FCA and PRA on the same incorrect basis. Discovery of the compulsory insurance error (8–9 October 2023) By 9 October 2023, after consulting the PRA Rulebook and FSCS website, the Firm realised both prior submissions and “corrections” had been incorrect. The Firm waited until a pre-scheduled supervisory meeting on 25 October 2023 to raise this with the PRA. Instruction of external legal advisers (late October 2023) At the PRA’s request, the Firm sought external legal advice. However, its instructions were narrow and excluded overall calculation methodology. The advice confirmed certain policyholders should have been included. On 22 November 2023, the Firm provided updated data to the PRA. Continued errors and independent review (January – August 2024) In January 2024, an internal question arose as to whether certain income figures included in the data should be reported net of reinsurance. The Firm wrongly assumed they should without seeking advice. In February 2024, the PRA informed the Firm it had concerns about the Firm’s control framework and requested the Firm conduct a thorough review of its FSCS Liabilities reporting. In May 2024, the Firm submitted partly inaccurate data to the FCA In August 2024, the independent review confirmed that the Firm had never correctly reported its FSCS Liabilities and no adequate controls had existed. Remediation included updated procedures, corrected figures, and payment of outstanding FSCS fees.
Failings	Fundamental Rule 2 (due skill, care and diligence): The Firm failed to calculate FSCS Liabilities accurately, submitting incorrect data on multiple occasions. The PRA found the errors were “significant in magnitude and duration”, arising from failure to consult the PRA Rulebook or seek professional advice. The PRA considered the correct approach was “clear and obvious” and expected firms to have knowledgeable staff or seek appropriate advice proactively. Senior individuals were aware no written procedures existed but failed to address this. Fundamental Rule 6 (organise and control affairs responsibly and effectively): No written procedure for calculating FSCS Liabilities existed before late August 2024. This was compounded by: no effective senior oversight; no effective challenge function; no clear accountability for compliance; and no effective audit process.
Early account scheme / Discount analysis	HDI Global participated in the PRA’s EAS, producing a factual account that the PRA described as “fulsome and candid”. However, under the PRA Settlement Policy, an enhanced settlement discount (above 30%) requires both a factual account and early admissions, on a without-prejudice basis, as to potential rule breaches. The Firm received only the standard 30% settlement discount available. However, at Step 3 of the penalty calculation, when considering mitigating and aggravating factors, the PRA applied a 15% reduction for: participating in the EAS; cooperating throughout the investigation; and having no previous disciplinary record. This was balanced against the aggravating factor that breaches were recurrent and persisted over three years.