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FCA wins Complaints Commission ruling in 10-year register failure dispute

A longstanding grievance over the upkeep of the FCA’s register has been dismissed after 10 years of complaints.

In his final report into a series of complaints over the accuracy of data held and how the FCA has responded to errors,  Complaints Commissioner Anthony Townsend has ruled that the FCA has taken suitable steps to fix issues raised.

The ruling follows an eight-part complaint in February about the quality and transparency of the register.

An intitial report into the same complaints was first presented in 2009. Townsend the also considered the case in February 2017.

In the most recent version of the complaint, filed earlier this year, the complainant says the FCA’s official response to the challenges is still unacceptable.

In the time since the previous report, the complainant has continued correspondence with the FCA, the Complaints Commissioner and the Information Commissioner, saying the FCA’s initial response to criticisms was “broadly as unacceptably entrenched” as they expected.

Townsend says neither the Commissioner’s office nor the FCA should be devoting “further resources” to addressing the concerns.

A decision notice from the Information Commissioner was handed to the complainant on 27 June, as part of continuing engagement.

A second allegation in the complaint this February argued that the FCA had not appropriately calculated the cost of rectifying its register to fix inaccuracies.

In a third challenge, the complainant says the explanatory text added to the register to fix previous errors still left the service misleading.

FCA pays out over register entry that was inaccurate for four years

The complaint raised concerns over how controlled functions would be recorded under FCA’s Senior Managers and Certification Regime.

The complaint added that the length of time the FCA complaints team took to consider and respond to queries was inadequate.

Townsend says: “I realise that you [the complainant] want the FCA to amend the Register in the way that you believe is required. I appreciate that this remains of great concern to you. Nevertheless, I agree with the FCA that there must come a point when further resources should not be devoted to matters arising from this situation.

“The substantive matters have already been looked at extensively. I have concluded that it would not be productive to look further into these complaints.”

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There are 13 comments at the moment, we would love to hear your opinion too.

  1. Alistair Hinton 22nd August 2018 at 5:58 pm

    The complaint did NOT raise concerns over how controlled functions would be recorded under FCA’s Senior Managers and Certification Regime; indeed, its proposed Register redesign will not impact upon cases such as this one unless FCA includes in it the wholesale removal of all historical data.

    For the record, the person who filed the complaint is not and never was a financial adviser. He happens to be a director of a once authorised IFA firm, but he not only gave no advice but also undertook no regulatory controlled functions nor worked for that firm (as FCA’s website states that all “Approved Persons” MUST do); indeed, he has never practised in the financial services industry in any capacity. He therefore had no business to have been portrayed as a “CF” anything on the Register.

    However, more resources ARE being allocated to investigating this case – just not those of the Complaints Commissioner or FCA, each of whom is aware that it is now being dealt with outside the provisions of FCA’s Complaints Scheme because FCA no longer wishes to do so under the terms of that scheme (the Commissioner is empowered to address only complaints falling within that scheme); what continues to be addressed is nevertheless the self-same complaint.

    FSA/FCA seeks to justify the disputed records on the grounds of its specious assertion that they are “legally and factually correct”, yet FSA admitted in writing 9 years ago that they were “misleading”, “unfair” and “unclear” (its own words). It has emerged over the years that FSA/FCA creates and defines terms and designates individuals and firms in accordance with its own whims, in blatant disregard both of the interests of those it portrays and of members of the public who consult its Register. FSA/FCA’s legal duty is to maintain that Register accurately at all times, but the beneficiaries of that statutory document are its USERS who cannot be expected to understand what lies behind some of what is published on it.

    FSA/FCA’s statutory responsibility is to regulate the financial services industry and authorise its practitioners, not to regulate the English language and authorise its lexicographers!

    This matter is therefore still ongoing, despite the length of tme that it has taken to date; the “dismissal” of the case is therefore that of FCA and the Complaints Commissioner alone and a series of further steps are being taken to address it.

    • The guy was a director of an authorised firm and you think he “had no business to have been portrayed as a “CF” anything on the Register”??? Assuming you are AXH00224, take a look at your own approval history, and the rules the Commissioner quoted in the report linked from the article above.

  2. @ Adam Smith:

    The simple answer to your question is “yes”.

    Whilst I am aware of what you write in both cases, the inclusion of “CF” in the Register record of an individual who undertakes NO regulatory Controlled Functions is incorrect and misleading in conveying the impression that he/she DOES carry out regulatory Controlled Fnctions.

    The nub of the problem here is that the law appears to permit FSA/FCA to define a directorship of an authorised firm as a Controlled Function when clearly it is a legal status governed by the Companies’ Act and not something governed by financial services legislation. A Controlled Function is something that someone carries out, whereas a company directorship is a legal status that does not require its holder to carry out any such functions or work for his/her firm.

    The individual concerned had in any case been a director of his firm for almost a decade before FSA “approved” him as such, yet FSA had no jurisdiction over his directorship and was therefore in no position and had no need to “approve” him as a director of an authorised firm.

    I stress once again that FSA/FCA’s website specifies that all “approved persons” MUST work for their firms, yet the individual concerned never did so in any capacity and therefore did not require “approval” so should not have been asked by FSA to apply for it. It is also unclear what would have happened had FSA declined to approve that person in terms of the impact, if any, upon his firm.

    • Control functions are applied to anyone who has significant influence over a regulated business regardless of whether or not they undertake regulated activities.

      If he was a director then he certainly had a significant influence over the business.

      CF1 is a director function – its literally the first CF.

      • The issue here is that, to the uninitiated Reguster user, “CF” means that the person so described does indeed carry out regulatory Controlled Functions; however, as I pointed out previously, FSA/FCA’s website specifies that all “approved persons” MUST work for their firms (they show “must” in italics), so someone who does not work for his/her firm in any capacity does not need to be “approved”, should npot have been asked to apply for “approval” and sould not have been granted “approval” in accordance with that very clear stipulation.

        I am aware that “CF1” is the first “CF” on the list, but the notion that FSA/FCA “approves” an individual director who does not work for his/her firm is bad enough but when such a director had held that office for years even before the firm concerned had been authorised (which is the case in this instance), it is that much more of a nonsense.

        • How exactly does the director of a business not work for that business?

          • Alistair Hinton 23rd August 2018 at 4:17 pm

            Very easily, I should think, if he/she chooses not to do so and is not employed by that firm to do so! In fact, I understand that FCA has actually expressed its view that a director of an authorised firm works for that firm “whether or not he/she does so” (its words).

            That said, the designation “CF” for a director of a firm who doesn’t work for it is by no means the gravest of the issues concerned; the case involved several records where two people were each classified as “CF1(AR) Director” of and one as a “CF21 Adviser” for a “principal firm” to which their own firm was once an “AR”, which is doubly misleading (as indeed is the very term “AR” itself, since it suggests to the uninitiated that an “AR” firm was “appointed” by a “principal firm” to “represent” it whereas, in reality, the “AR” firm “appoints” the “principal firm” to authorise and regulate it on behalf of FSA/FCA and no “representation” is involved, as FSA/FCA admit.

            The Register further refers to an “AR” firm as being an “agent” of the “principal firm” which, again, is not the case and there is no “agency” agreement between them.

            All of this might seem academic and indeed could be (for all its inaccuracy et al) but for the fact that, when the “principal firm” has been subject to public censure by the regulator and false associations between it and an “AR” firm and/or its directors have been created, Register users will form their own negative conclusions – and who could blame them?

      • Alistair Hinton 30th August 2018 at 1:03 pm

        @ Matt Amber A:

        Two points here.

        Firstly, I quote from standard text in an “inactive” individual’s Register entry describing what is supposedly meant by it:

        “An individual (and some firms) previously approved to perform certain tasks in a regulated firm. Such individuals were described as ‘approved persons’ and the tasks as ‘controlled functions.’”

        The crucial part of this is “to perform certain tasks”; this statement is clearly intended to identify such individuals as having “performed” regulatory “controlled functions”.

        If the individual has never performed such tasks, it is unclear why he/she would be described as though having done so.

        Two points here.
        Firstly, I quote from standard text in an “inactive” individual’s Register entry describing what is meant by it:
        “An individual (and some firms) previously approved to perform certain tasks in a regulated firm. Such individuals were described as ‘approved persons’ and the tasks as ‘controlled functions.’”

        The crucial part of this is “to perform certain tasks”; this statement is clearly intended to identify such individuals as having “performed” regulatory “controlled functions”.

        If the individual has never performed such tasks, it is unclear why he/she would be described as though having done so.

        Secondly, no mention is made of the “significant influence” of the individual over a firm. This is something that is not and indeed cannot be determined solely by the fact of his/her directorship thereof; indeed, the degree of “significance” of such influence is of necessity predicated upon the extent of the individual’s training, qualifications and experience in the field of financial services.

        From this, it is reasonable to conclude that an individual with no training, qualifications and experience in any area of financial services, its practice and its regulation will have scant influence over that firm, its practices, its regulatory decisions, its compliance, its day-to-day running and the services that it provides.

        It remains unclear how FSA/FCA can “approve” an individual as a director of his/her firm when he/she has already been one for almost a decade; it is also unclear what the consequences of FSA/FCA’s refusal for any reason to “approve” an individual whom it had requested to apply for “approval” might have been.

  3. Alistair Hinton 24th August 2018 at 4:43 pm

    It might also be worth mentioining that FCA, which arguably appears unconcerned to distinguish between £100K and a tenner when it suits it, seems as undeterred as was FSA before it in spending large amounts of its authorised individuals’ funds on mishandling this case as it has done; the total amount of those costs over the years, whilst unquantified, will have been immense. The sheer number of words uttered, written and reviewed by FSA/FCA and the Complaints Commissioner’s office almost certainly goes into seven figures; many tens of thousands more will have been uttered, written and reviewed by other organisations including but not limited to the Information Commissioner’s Office, Ministry of Justice, HM Treasury, the Parliamentary and Health Service Ombudsman and the House of Commons Information Office as well as the individuals’ MP and MEP (all funded by taxpayers rather than by the financial services industry) – and it’s still ongoing.

    Most of that expenditure (of time and energy as well as other people’s money) could have been avoided had FSA dealt with the matter appropriately in its first complaint decision letter instead of admitting to misleading, unfairness and lack of clarity but taking no action in respect of it.

    Although it’s a separate issue, one might wonder why FSA/FCA were/are constituted as private companies limited by guarantee when they were set up in statute to provide a public service and are not-for-profit institutions without shareholders – but that’s for another day.

  4. Mr Hinton

    As you have confirmed your IRN is AXH00224, I remember you as an AR of the network and you were cantankerous then, seems little has changed!

    You have wasted a lot of the FCA’s time on a frivolous matter, move on.

    • Alistair Hinton 28th August 2018 at 5:44 pm

      I have confirmed no such thing and, since I was never involved in the “pricipal firm”‘s activities, you are clearly mistaken in what you claim to “remember”; it would in any event have been difficult for me to have been involved in such activity when I was never a financial services industry practitioner!

      It is up to FSA/FCA, the Complaints Commissioner and all the others to determine how much time they spend on the issues concerned. There is in any case nothing remotely “frivolous” about being described on a statutory public Register as a CF1 Director of or a CF21 Adviser for a “principal firm” the was quite rightly subjected to public censure by FSA (and which went to the wall as a direct consequence) when those descriptions are inaccurate; it takes little to figure out what Register users would quite understandably conclude from them, having read the text of that censure.

      I HAVE “moved on” – to continuing to deal with the issues via different channels; the consequences were of sufficient gravity to warrant that and it will continue for as long as it takes.

    • Alistair Hinton 29th August 2018 at 9:16 am

      P.S…

      I was never personally an “AR” of any firm. I was a director of a firm that later became one. As I have stated above in any case, the very term “AR” as defined by FSA/FCA is grossly misleading.

      Lastly, it would seem that FSA/FCA do not share your view that their time has been wasted on the case concerned. Had they done so, they would have rejected the complaint at the outset; as it is, they upheld it.

      Whilst there seems to be no reason why the principles involved in the case should not be discussed here, I am not convinced that anything more personal than that has a place in responses to the article above. Should you have further comments of that nature, please therefore feel free to address them to sorabji.archive@gmail.com . Thank you.

  5. Alistair Hinton 30th August 2018 at 2:06 pm

    Apologies for the duplication of the first five paragraphs in my post earlier today; I cannot account for what caused this technical glitch!

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