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Complaints Commissioner rejects FSA complaint over £15k Catalyst loss

The Complaints Commissioner has rejected a complaint against the FSA from an investor who claims to have lost £15,700 as a result of the collapse of Catalyst.

The investor says their loss is a result of the FSA labelling life settlement funds “high risk, toxic products” in December 2011.

In a decision published last week, the commissioner said the complaint cannot be considered under the rules of the complaints scheme, as it relates to the regulator’s legislative functions.

In October 2013, the FCA censured Catalyst Investment Group for “recklessly misleading” investors when promoting bonds issued by Luxembourg-based life settlement vehicle ARM Asset Backed Securities.

Catalyst was the UK marketing and distribution agent for ARM, and offered bonds issued by ARM to UK advisers, who in turn sold them to retail investors. The bonds, which were backed by life settlement policies, were sold to investors in the UK and Europe without ARM having the appropriate permissions.

The investor complained that the FSA’s announcement on life settlement funds in 2011 was “premature, inaccurate and prejudicial” and led to a high volume of redemption requests which resulted in the ARM funds being suspended.

Complaints Commissioner Antony Townsend says: “I can understand why you are unhappy with the manner in which the regulator chose to publicise its intentions regarding the future distribution of traded life policy investments.

“However, following careful consideration of all of the options, and discussions with a number of TLPI providers, the regulator felt that the announcement it made was the most appropriate way for it to undertake its statutory duty of preventing the potential large scale misselling of TLPI to retail investors.”

Townsend adds the statement was “a matter of judgment for the regulator” in a difficult decision on how best to fulfil its statutory duties.

He goes on to say that the ARM bonds should not have been marketed in the UK and he does not believe the regulator’s actions in 2011 were the cause of Catalyst’s collapse.

The commissioner has published the outcomes of two other complaints against the regulator this week. It rejected one complaint from an investor who claims the actions of the Financial Ombudsman Service and the Irish Financial Services Ombudsman, together with the actions of their stockbroker, caused them to lose their life savings.

The commissioner says complaints about the FOS are excluded from its remit.

It rejected another complaint from an investor who says the FCA’s response to a complaint about a bank’s misleading terms and conditions for an investment bond was inadequate.

Townsend says there is no evidence to suggest the FCA failed to fulfil its statutory duty or failed to act upon the information provided.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. One wonders if the Complaints Commissioner is likely ever to uphold any complaint against he FSA/FCA about anything at all. There always seems to be some technicality or other to get round it.

  2. Can a complaints commissioner lie with impunity?

    “However, following careful consideration of all of the options, and discussions with a number of TLPI providers, the regulator felt that the announcement it made was the most appropriate way for it to undertake its statutory duty of preventing the potential large scale misselling of TLPI to retail investors.”

    I have made numerous requests under the Freedom of Information Act and there is no evidence the FSA considered any other options. Furthermore, the so called ‘discussions’ with a number of TPLI providers did not include details of the announcement, they were highly critical when they eventually saw it, so to present this as an endorsement of the action taken is highly misleading.

    This is disgraceful behaviour from the person who is supposed to protect savers. God help the many with newly liberated pension funds.

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