The Complaints Commissioner wants the FCA to regularly check its enforcement team is following guidance on when they should report suspected fraud to the police after a complaint called into question the regulator’s processes.
The complainant alleged the FCA had failed to work with investors and the police in its enforcement action against two investment firms.
The complainant said there was enough evidence to raise a suspicion of fraud and the regulator should have involved the police in its investigations.
The FCA partially upheld the complaint and acknowledged there was a record-keeping failure by its predecessor, the FSA, which meant it could not determine how much the police were involved in the early part of the investigation.
The regulator said that would not have had an impact on investors but it did say the failure was “unacceptable”. Its complaints team recommended that the enforcement team should “ensure they have clear guidance on referring and recording decisions in respect of suspected fraud cases”.
The complainant referred the complaint to the Complaints Commissioner, who agreed with the regulator’s decision to partially uphold the complaint. The commissioner did not consider two other points in the complaint because they were not raised with the FCA first.
The Complaints Commissioner says this is not the first time doubts have been raised about the regulator’s procedures for reporting suspected fraud to the police. The commissioner pointed to a decision last year which gave details of another situation where the FSA had not involved the police at a “sufficiently early stage”.
The commissioner says the regulator should review the guidance that has now been put in place.
The complaint decision says: “I am pleased to have received confirmation that the FCA’s enforcement team now has clear guidance on when to report suspicions of fraud to the police, and I recommend that the FCA keeps the matter under periodic review to ensure that the guidance is being followed.”