A complainant is seeking the value of a £5,000 bond in compensation from the FCA, saying the regulator failed to fully investigate the “fraudulent” firm which sold it.
The complainant lost money after purchasing an unregulated £5,000 corporate bond from an unnamed company on behalf of an entity in Switzerland last year.
An agreement to invest had been signed when the complainant contacted the FCA to query the cooling off period.
In a ruling published today, Complaints Commissioner Antony Townsend says the FCA informed the complainant that that the provider was not regulated.
The watchdog also suggested the complainant seek legal advice and contact the Citizens Advice Bureau if they intended to buy the bond.
The bond was purchased on 3 May 2017 without consultation with the CAB.
The complainant did not accept Townsend’s preliminary decision in favour of the regulator after losing the money they invested, however.
The FCA failed to investigate further after they flagged potential fraud and did not assist with the recovery of losses, the complainant alleges.
The regulator had informed the complainant of a potential scam but did not pass on details of the firm to its Unauthorised Business Division, the complainant says.
Townsend has found this did not contribute to the financial loss the complainant then experienced.
He says: “It appears you did not phone the CAB for advice but instead chose to proceed with the purchase of the bond. It is very unfortunate you lost your investment but that is not the fault of the FCA.
“I consider the FCA member of staff gave you sufficient information and guidance to enable you to understand that the [firm] and the bond they were trying to sell you were not regulated; to explain to you what your options were with respect to the purchase and what to do if you did not wish to go through with the purchase; and to warn you that cold callers asking you to invest over the phone could be fraudsters.”
The complainant is asking for another independent arbitrator or adjudicator to rule on the case, but Townsend says this is not possible given the Complaint’s Commissioner has responsibility for such complaints.
The complainant may bring the Commissioner’s decision and review to court at their expense, however.