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FCA orders independent review of Connaught fund regulation

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The FCA is appointing a third party to review its regulation of firms connected with the Connaught Income Series 1 Fund.

Responding to reports by the Complaints Commissioner, the FCA says the review will start once an ongoing enforcement investigation against Connaught has finished. The FCA says it will publish the outcome of the review “to the extent that it can”.

One of the Complaints Commissioner reports was a response to IFA Adam Nettleship who had complained about the role of the FCA and predecessor regulator the Financial Services Authority in the failure of the Connaught Income Series 1 Fund. The fund was suspended in 2012.

Complaints Commissioner Antony Townsend criticised the FCA in his report saying it was slow to to reach its conclusions.

He adds: “Despite a long build-up of evidence pointing to the risk of serious consumer detriment, it failed to act in a co-ordinated fashion, and failed to involve other agencies when it clearly ought to have done so.”

He was also concerned the regulator relied too heavily on a clause in legislation that led to Nettleship being denied explanations of regulatory actions.

Townsend says: “This complaints scheme is not designed to deal with major inquiries into alleged regulatory failure, nor to provide the kinds of remedies which you are seeking on behalf of investors.”

The FCA has agreed to pay £500 to Nettleship.

The second report was in response to a complaint from former chief executive of bridging lender Tiuta George Patellis, who had contacted the FSA more than a year before the Connaught fund was suspended with evidence of alleged fraud.

Townsend says the regulator must publicly apologise to Patellis for its “lack of care” in its treatment of him as a whistleblower.

The FCA also agreed to pay Patellis £1500 for distress and inconvenience.

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. This is case is living proof that the current regime is not fit for purpose. George Patellis has been hung out to dry as have the consumers who invested £100m AFTER the fraud was shown to the FSA. He has found it difficult to get proper employment.

    He should be receive a six figure sum derived from the bonuses of the staff who ignored him.

  2. Who’s betting that the “independent” 3rd Party appointed by the FCA(independent???????) will be one of their “Big 4” chums who will no doubt bill the FCA(Us!!!!!) £££££Millions for the pleasure?

    Who’s also betting that the “independent” review will find no major fault with the FCA thereby hoping for another future juicy “review” appointment?

    What ever way you slice it Garry we’re paying!

  3. John Rawicz-Szczerbo 6th December 2016 at 6:18 pm

    As one of the IFAs firms whose business has been destroyed by the FCA’s failure to act, I welcome the Commissioner’s report. The findings against the FCA are, in my opinion, the tip of the iceberg. By failing to act promptly to stop the financial misappropriations at Tiuta, whilst being overseen by Bluegate and Capita, all three being regulated firms, the FCA had failed, and as part of the process of cover up it engaged in misdirection. The FCA briefed the police that Connaught is a mis-selling scandal when, that is not the fundamental truth.

    In these ways, the FCA deflected blame from its failure to stop theft of money leading to Tiuta’s collapse and the collapse of the Connaught Fund. As a result, the regulator has destroyed businesses in the IFA community, which did not have Professional Indemnity insurance covering this failure, and the Financial Services Compensation Scheme was unable to work because the true causations of the investor losses had nothing to do with the IFA’s.

    My meetings with the police had indicated that they were holding off on a criminal investigation pending the completion of all civil recoveries by the liquidator. This resulted in the FCA scapegoating the IFA’s for losses that they had nothing to do with.

    I believe it is entirely appropriate that the FCA should be forced to compensate every Connaught investor itself, and senior persons within the regulator should be held culpable in the courts for any wrongdoing.

    This scandal shows the FCA in a far worse light than any scandal so far investigated by the Treasury Select Committee, including market abuse related blunders which led to havoc on the insurance markets. This regulator should be closed down, and not restarted with the same people in a new guise, as happened with the FSA.

    The remedies proposed by the Complaints Commissioner are more than just a little thin. An independent inquiry of what went on is just a shuffling of papers. A public apology by the FCA is not enough. The FCA’s inaction and cover-ups systematically over more than five years has damaged businesses and people.

  4. John Rawicz-Szczerbo 6th December 2016 at 7:13 pm

    The other point I would to make is that the FCA have had no problem in lying about what they knew, and most importantly believe they are above the law in their dealings. Based on their behaviour in this matter thus far, I have no doubt in believing they would supply limited and mis-leading information to any enquiry. Yet another stitch up in the making.

  5. I do believe this is one case (there are of course more) and this one in particular is where it highlights the FCA’s fearless approach to failure in its own part, and a complete disregard to getting it right or indeed doing the right thing.

    The immunity and un-accountability, that is afforded to them creates more of an issue, as in this case….. maybe ignorance is bliss? when you no longer have anything to fear, even though they knew all about this, they (FCA) can just shrug their shoulders and jog on quite happily.

  6. The FCA recently stated its wish to encourage people to blow the whistle on dodgy practices yet, in light of this and so many other reports from people who’ve dutifully done so, only for the regulator to FAIL to do anything, the general view is bound to be Why should we bother? Why doesn’t the FCA draw up and publish a whistle blowers’ charter stating unambiguously exactly what it will do upon receiving such reports? Anything less is just hot air and empty platitudes that mean nothing.

  7. Writing as almost certainly the first ‘man in the street’ pension investor to contact his MP over this matter. Will the FCA also now apologize to my MP for a.) telling him to advise me that I should contact the Financial Ombudsman which I later realized meant they were suggesting my IFA was at fault and b.) for wasting so much of his time following up on my subsequent complaints? Not likely I suspect.

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