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FCA cleared in complaint over investigation amid ‘poor advice’ concerns

Firm accused the FCA of intimidation and blackmail during investigation linked with ‘poor advice’ concerns

The Complaints Commissioner has ruled in the FCA’s favour after a firm complained about how the regulator investigated its business amid concerns about “poor advice”.

The firm initially complained to the regulator in November 2016. There were four parts to the complaint identified by the FCA.

According to the Complaints Commissioner decision, the firm alleged an FCA supervisor was “intimidating and threatening” in attempting to coerce it to agree to a voluntary requirement and wanted this to be completed in an unreasonable timeframe.

The decision says the firm sought legal advice because it did not agree with the FCA that its product was non-standard.

The firm also alleged that during an interview several FCA enforcement staff members were passing post-it notes to one another and “continually pointing at things”. The firm also said one staff member made a “chopping gesture” to stop another staff member from continuing down a line of questioning that might have been detrimental to the FCA’s case.

The firm claimed the FCA blackmailed another firm into telling the complaining firm’s clients that they were invested in a non-standard product. The complaining firm said this led to a large number of enquiries and a potential liability of £6m.

The firm also complained about how he had been treated by the FCA’s whistleblowing team when it contacted them with information about another firm.

The firm complained that the whistleblowing team told them to “fill your boots” when it suggested it would raise its concerns with the Action Fraud agency.

The FCA’s response

The FCA issued an initial complaint response on 13 March 2017, which did not uphold any element of the complaint. The firm then referred the complaint to the Complaints Commissioner.

In relation to the voluntary requirement, the Complaints Commissioner decision says the FCA complaint response considered the firm was given a reasonable amount of time to file the document given the “serious nature of the concerns”.

It also said reference to non-standard products was left out of the voluntary requirement after representation from the firm’s solicitor.

The FCA supervisor agreed to this because: “the FCA’s concerns were far broader than whether the products were standard or not and indicated that even if the products were standard, the customers had still received poor advice”.

In relation to the passing of notes in the interview, the Complaints Commissioner says interview recordings do not reveal evidence of bullying or intimidation tactics.

The FCA could not make “conclusive findings” about gestures made or note passing because enforcement interviews are not videoed. However, staff did tell him it was not unusual for team members to pass each other notes or point out relevant information.

The Complaints Commissioner decision says: “It should be remembered that the purpose of such interviews is to gather evidence and test concerns about alleged regulatory breaches. The complaints investigator concluded it was not possible to state whether the passing of notes during your interviews could be perceived as an intimidation tactic.”

It adds: “Although I appreciate that you find this answer unsatisfactory, based on the evidence I have seen I consider that it was a reasonable response to this element of your complaint.”

Backlash over ‘bullying’

In relation to the blackmail allegations, the complaints investigator told the firm his review of the case file did not find evidence that indicated the FCA used bullying tactics to coerce the other firm to write to clients.

In response to the whistleblowing aspect of the complaint, the FCA staff member said they did not recall saying “fill your boots” but apologised if they did use that phrase or gave the firm that impression.

The Complaints Commissioner decision says: “Although the FCA was unable to make a conclusive finding on this phone call as it was not recorded, the whistleblowing team offered you an apology for any insensitive language that may have caused offence.”

It adds: “Based on the evidence I have seen I consider that the Complaints Team’s response on this element of your complaint was reasonable, although I am surprised that not all phone calls with the Whistleblowing Team are recorded. I suggest that the FCA considers whether it would be appropriate for it to do so.”

The FCA whistleblowing team said all calls to team from whistleblowers and vice versa are recorded. However, the call from the complainant was inbound and made to a staff member’s direct line so it was not recorded.

The FCA said that many whistleblowers don’t want to be recorded because of the nature and sensitivity of the calls.

Complaints Commissioner Antony Townsend says: “In conclusion, for the reasons set out above, I have not upheld your complaint. I realise you will be disappointed by my decision but I hope you will understand how I have reached it.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Interesting read, so my questions and thoughts are to say the least, conflicted.
    I would have thought a request would have been made to recorded, video being the best, the meetings by both parties.
    I would also suspect that a request to have a legal representative would also have been made by the firm.
    I would be very interested to know what a firms rights in such circumstances are, and if anyone has requested the above actions and been refused?

  2. I strongly suspect that, of those that have been the subject of an investigation by the regulator, there are many small firms who would complain about the FCA’s treatment of them if they (a) had the time to do so, (b) had the necessary financial resources to pursue such (legal assistance and lost billable hours) and (c) thought that this would actually achieve something!

  3. That’s about what you would expect, complaints about the FCA are usually dismissed by the Complaints Commissioner. They don’t often get that far, you have to complain within 12 months of the incident that give rise to the complaint. They also decide what sort of complaints they will deal with and the Complaints Commissioner usually back up the FCA. One almost gets the impression this is their primary function, albeit they are supposed to be a higher authority.

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