The FCA has changed the way it issues updates to the FCA register after a complaint uncovered firms are able to carry on writing business despite changes to their regulatory permissions.
An investigation by the Complaints Commissioner found a firm had done business with 11 different providers and carried out 97 mortgage transactions after it had agreed with the FCA not to carry out regulated activities.
The case following a complaint originally made to the FSA, and escalated to the Complaints Commissioner.
The original complaint claimed the regulator did not remove an adviser, known as Mr R, from the register in a timely manner.
The complainant alleged this resulted in them and their late husband doing business with the adviser in June 2010.
After the adviser failed to forward relevant information to the couple’s insurer, the complainant’s husband’s life cover was invalidated and the complainant could not claim on the policy when he died.
The insurer said they still did business with Mr R’s advice firm based on the fact it was still authorised, even though Mr R was no longer authorised.
The FCA complaints team said the regulator acted promptly when it became aware the firm had no professional indemnity insurance cover in December 2009 and the firm agreed in January 2010 not to carry out any regulated activities.
The FCA said this would have been reflected on the register immediately.
Subsequently, the adviser and the firm were found to have breached the agreement not to carry out regulated activities. The adviser was banned and fined in June 2013.
The regulator was unable to give records of what the register looked like in January or June 2010 but gave the commissioner data from its internal systems, which feed into the register. That showed the firm was to stop all regulated activities from 12 January 2010.
Those entries were made on 14 January and would have been visible on the public register from 15 January 2010.
After the complainant commented on a preliminary decision from the commissioner, the watchdog made further enquiries of the FCA.
It found data sold by the regulator through its “register extract system” did not show the firm had to stop regulated activities.
The commissioner says a note sold with the extract makes clear they system does not show restrictions on regulated firms. As a result, the commissioner did not uphold the complaint.
Townsend says: “I appreciate that you found yourself in a very difficult situation but on the evidence available I find that the regulator did follow the correct processes.”
But he has questioned how useful the register extract system is given that information was not included in it.
The complaint report says: “The risks which can arise from the way the system has been operating are demonstrated by the final notice issued in relation to R the firm, which shows the firm had done business with 11 different providers and carried out 97 mortgage transactions after the requirement to stop carrying out regulated activities was placed upon the firm.”
The FCA has since made changes to its data extracts to include restrictions and limitations, which went live in May.
The complaints commissioner recommended the FCA pay the complainant £100 for distress and inconvenience caused.
The complainant argued had they been told they would not be able to secure life cover for their late husband, they might not have taken out a mortgage or would have made different financial decisions when their husband was alive.
In light of the circumstances, the insurer offered a voluntary payment for the full amount insured which has been accepted.