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Complaints commissioner finds ‘serious failings’ in FCA enforcement case

The complaints commissioner has ordered the FCA to apologise to a firm and pay it £1,000 in compensation, after finding “serious” failings in the way an enforcement investigation was carried out.

The firm complained about the manner in which the regulator undertook an unannounced enforcement visit to its offices in April 2009, as well as its actions leading up to and following the visit.

The individual behind the complaint also claims the regulator has made deliberate attempts to prevent him or her from gaining further employment in financial services.

The individual claimed they had incurred losses of £1.2m as a result of the regulator’s actions.

The complaints commissioner says the FCA accepts that following an oral debrief to the firm, it failed to follow up with written details of its concerns, or the actions it wished the firm to take, in a timely manner.

The regulator also accepts it failed to respond to requests from the firm for details of the action it wanted the firm to take.

The complaints commissioner says: “These failures were serious given the significant concerns the regulator appeared to have had over the risks posed to consumers by your business.

“The regulator has produced no adequate reason why it took its supervision division almost six months to complete its internal reviews and either issue you with a scoping document (setting out the actions it needed you to undertake) or notify you of the decision to refer your case to enforcement.

“The regulator should, wherever possible, particularly in the case of a small firm, look to complete its agreed actions within a short time or, if this is not possible, keep the firm/individual concerned regularly updated.”

The commissioner says delays by the regulator were “indefensible”.

It has concluded there were deficiencies in the way the regulator communicated with the firm before the commencement of its enforcement action, and that the conduct of the investigation “fell below the standard the regulator expects of its staff”.

It has upheld the complaint in part, as it found there is “nothing to indicate (other than in the two instances I have described) the regulator acted inappropriately”.

The FCA says: “The commissioner did not uphold a number of elements of this complaint, noting that in respect of those elements there is nothing to indicate that the regulator acted inappropriately.

“The FCA acknowledges that the commissioner has upheld other elements of the complaint and accepts the recommendations. The FCA will accordingly apologise to the complainant and make an ex gratia payment of £1,000.”


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There are 14 comments at the moment, we would love to hear your opinion too.

  1. So it took 5 years to get to this outcome? Wow!

  2. Regulator: Serious failings = £1000

    Adviser firm: Serious failings = Not fit and proper/ banned for life and significant fine which in may cases bankrupts business and forces FSCS.

    Must remember to top up my Oyster card!

  3. I assume that those individuals at the FSA/FCA are now subject to disciplinary action to be concluded in the usual manner of no action required as no individual is responsible.
    If it was an IFA that acted in this manner huge fines, banning orders and public censure would be the par for the course so why does there appear to be one rule for us and none for them—-I don’t suppose that arrogance and infallibility creep in to their deliberations!!!!

  4. If the boot had of been on the other foot, I would imagine the payment would have had a couple of additional naughts on the end… It’s hard to say without knowing all the facts, but the individual wasn’t able to go about his normal business for a considerable period of time, so £1,000 payment in my mind doesn’t seem anywhere near the level it should be…

  5. £1000 is a bit of an insult for the loss of a livelihood. When will there be justice for the regulated?

  6. Roddi Vaughan-Thomas 17th December 2014 at 4:54 pm

    If an advisory firm treated one of its clients like, I suspect that more than £1,000 would be changing hands.

  7. Roddi Vaughan-Thomas 17th December 2014 at 4:56 pm

    Whilst you are moderating my comment can you insert ‘like that’ please.

  8. And as ever… the £1,000 compensation levied to the adviser comes out of FCA central funds… and they come out of …you’ve guessed it ….us the adviser industry…… May be small amount but somewhere in their annual audit they will need to account for it so it gets lost in the annual regulatory fee budget and ultimately passed back to us….A bloody MAZING…..

  9. From our side of the industry if we incur additional costs whether fees (or compensation) our profits are reduced and our business may/may not suffer accordingly, dependent on the amount. Hence our earnings (income) potentially reduces. We have to account for that ourselves. Not so the other way round. I bet their annual fee audit will not result in every staff member incurring a miniscule reduction in salary .

    Its the principle damnit that pisses me off not the figure….

  10. How is the compensation calculated,? What is the formula? Who pays the £1,000?

    Plus I thought the F-pack didn’t pay compensation for their errors?

    Who apologises? The people responsible and those senior to them who let them do it or the complaints investigator at the FCA who I was led to believe investigated and issued any apology on behalf of the FCA?

    They are a law un to themselves and treat us worse than employees without the benefits of employment.

  11. An ‘oral debrief’ without caution or representation and with any record made being notes made by the F-pack who make sure they have one more person in the room than any firm and insist on knowing who will be there, but don’t inform the firm who they will have there.

  12. Given that the £1,000 will be paid with OPM, it doesn’t even qualify as a flea bite. But with no regulator of the regulator and the Treasury stance that the FCA’s immunity from prosecution must remain sacrosanct, what can we expect? One law for them (theirs) and another for the rest of us (theirs).

  13. £1,000 !!!!
    Down right disgusting, albeit that in effect we are paying it

    I wonder if the reason this is so low, is the FCA’s immunity ? as I think the individual involved would (I would imagine) have a very good case to sue for the loss of the 1.2 million.

    And where is the naming and shaming of the individuals, where is the life time bans for not being fit and proper ?
    More serious failings ! how many more are out there, perhaps the industry could instruct a 166 skilled persons report at the FCA’s staffs own expense ?

    Let us not forget the FCA have raked in over 340 million (I am led to believe) in fines this year, enough to fund them for a good few years and self supporting themselves, MAS, and FOS and also make a good contribution to any levies

  14. DH – Unfortunately £340 million would only cover about 6 months of the FCA’s annual costs

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