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FCA to review register after another complaint about misleading data

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The FCA will review the system behind its register following the revelation in a Complaints Commissioner decision that a proper fix would cost between £50,00 and £100,000.

A Complaints Commissioner decision says the FCA will review the design of the “Tardis” system while saying it is a concern that changing information on the “inflexible” register should be “prohibitively expensive”.

The review was revealed as part of a long-running complaint which concerns a husband and wife who had set up an advice firm, Firm I, that became an appointed representative of another company, Firm B.

Their association with Firm B ended one year before Firm B was publicly censured by the FSA for breaching its rules and principles.

The couple later became aware that entries on the FSA register from 2004 gave the impression they had been directors and appointed representatives of Firm B and they had undertaken controlled functions for the firm, which was not correct.

The couple complained to the FSA and the former Complaints Commissioner in 2009. The FSA said amending the register would be too costly and that it would consider the matter again if there was a “redesign in the way information about appointed representatives is displayed”. The commissioner upheld the FSA decision.

The FSA also dded explanatory information to the website to clarify the role of a CF1 director (AR) but this was removed and not replaced when an updated register went live in 2015.

The couple’s MP wrote to the FCA to say the new version of the register still contained misleading information about them, and the couple complained to the FCA again in December 2015 and to the commissioner in June 2016.

In October, the FCA found there was no evidence the couple’s concerns had been taken into account when amending the register.

The Complaints Commissioner says: “They concluded that, even if your concerns had been taken into account, it was unlikely that the register would have been amended given the costs which would have been incurred.”

The regulator apologised and offered a payment of £500. The couple responded to the FCA saying its decision did not address all of their concerns.

In his decision, commissioner Antony Townsend says the letter sent by the FCA to the couple’s MP in 2015 was misleading. He says the case has parallels with another case about a misleading register entry that he responded to in 2016.

He says: “While the cases have many different features, it seems to me that both are examples of the FCA failing to put itself in the shoes of the regulated person or the end user of the register.”

The decision says the FCA’s IT department looked into whether changes to the register could be done at an “acceptable cost” but it found that a full solution would cost between £50,000 and £100,000.

It says: “It is nonetheless a matter of concern that changes to the register appear to be so costly. The FCA have made the point to me that although the proposed change may appear minor, it involves changes to the underlying data in the register, and that is expensive. It is also a matter of considerable concern that there appears to have been no reliable system for logging possible changes to the register to ensure that they were reviewed at the appropriate moment.”

Townsend has recommended the FCA compensation payment is increased to £1,500.

He also says: “The FCA should consider whether this case, and the other one to which I refer, suggest that staff need to be reminded that, when considering representations from regulated individuals, they need to consider not only the procedural correctness of what the FCA has done, but also the possible unintended impact upon the individuals.”

He also says the FCA must consider if the problems with making amendments to the register suggest it’s design is to inflexible.

The FCA says: “We accept the commissioner’s findings and recommendations in this case and will be writing to the complainant with a further apology and to offer to make an increased ex-gratia payment.”

The FCA will review the system behind its register as part of its move to new headquarters in 2018.

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Comments

There are 14 comments at the moment, we would love to hear your opinion too.

  1. I am sorry but £50,000 – £100,000 of OPM (other peoples money) is small change to the FCA. The register needs a complete re-design it can only be understood by those in the know and surely should be a tool for consumers to vet advisers and check for complaints data, scope of authorisation, FCA rulings etc. – it should also be extended to show FOS complaints, independent or restricted, basis of fees, SPS etc, plus a new FCA “risk rating” based on GABRIEL data (so if you sell a load on unregulated products there is some comeback).

  2. Here starteth, the problem and here endeth, the problem

    The FCA like the FSA before them, have, to their hands all the information god (which ever one you kneel before) and more, can provide

    And still ………. they conduct themselves like a one legged man in a arse kicking competition

  3. The FCA’s register of authorised individuals has been a shambolic farce for decades. A friend of mine who worked at BA used to be assigned on a regular basis to go through the regulator’s list of its RI’s, pick out the multitude of errors (e.g. those of whose departure the regulator had been notified years earlier) and then get them corrected. It was an annual task that took (wasted) days. 20+ years on, nothing much seems to have improved.

    • So FCA, which has its own permanent IT department, would nevertheless outsource such work to people such as your friend? I find this astonishing! I find it even more so that its Register remains so apparently faulty despite having done so on the occasions when it did (and there have been several recent criticisms of the inappropriateness of various factors including but not limited to it functionality and operation and I can only assume that the various recent focuses of FCA’s attention on this – including the case referred to above – is what appears now to be persuading its time-lords finally to embark upon a fundamental redesign of its TARDIS as should have been done years ago.

  4. FCA’s absurdly excessive £50K–£100K price tag in response to a complaint about just two individuals’ records represents the cost of altering ALL relevant individuals’ Register records, not just the complainants’, even though they complained only about their own and have no interest in or control over others’.

    Is the problem the Register’s design inflexibility or FCA’s duty to amend other records following agreement to amend the complainants’? One suspects the latter.

    Let’s assess the cost, assuming £1,500 daily for 3 senior IT staff to work solely on this as follows, starting at 09.00 on a Monday.

    1. Write a macro to identify those involved – that’s to say ONLY directors of firms classified as “Appointed Representatives” of “principal firms”, so EXCLUDING self-employed sole traders, firms’ employees and those whose practices are directly authorised/regulated by FSA/FCA; let’s assume 5,000 records.

    2. Amend all incorrect records including those showing “principal firm” names against them.

    3. Test the integrity of the changes before implementing them.

    4. Implement the changes.

    How might this pan out? Let’s say a day to write and test-drive the macro and 9 more days to input, test and implement all automatic and manual amendments.

    Total cost? £15,000.

    Total cost per record? £3.

    If that’s too dear, my name’s Donald Trump! It isn’t.

    These figures are of course speculative, yet if many more than 5,000 records were involved, the process would still cost only £3 per person; FCA’s price tag as justification to maintain the status quo is thus at best specious and at worst grossly misleading.

    Such changes will benefit not only Register users but also industry practitioners. Failure to make them will identify FCA’s brazen willingness to continue to mislead.

    As the system governing FCA’s Register design and functionality is called the “TARDIS”, its “tardiness” in engaging its time-lords, let alone the archangel GABRIEL, to address this seems all the more remarkable.

  5. Pick any large organisation that was established more than 20 years ago which stores huge amounts of data and you will see massive issues – its inherent within our industry.

    Imagine all the data they hold – I’m sure it would blow your mind – then imagine the systems 20 years ago to store it, then imagine the systems 15 years ago to store it, then imagine the systems 10 years ago to store it…etc.

    At the moment that data is probably sitting across c.10 different programs, all with different databases behind them, a fragile, inflexible mish-mash.

    Its the same with the life co’s, some older banks and most platforms. What it needs is a complete rebuild but im sure most would baulk at the cost of that.

    • Sounds like an poor excuse to me Mathew !

      Remind me again how much Natwest were “FINED” for system failures recently, remind us all about the unlimited (life time) liability we have !

      Are we just to shrug our shoulders and say poor regulator ?

      The truth is the FCA is not fit for purpose and throwing money at them is a waste, akin to washing it down the drain

      We all have to adapt (and pretty bloody smartish) in this industry with the resources we have already…….. the FCA should be minded to do the same !

      • The trouble is that money isn’t actually “thrown” at FCA; it’s extracted by FCA from its authorised and regulated entities in the form of “regulatory fees”.

        I wonder how many other private limited companies derive almost all of their incomes from compulsory subscription as FCA does. OK, I know that it’s set up in statute and not for the purpose of generating private profit, but it’s a private company nonetheless (as indeed was its predecessor FSA).

        I’m no fan of nationalisation in principle but do struggle to figure out why FSA was and FCA is constituted as a private company limited by guarantee when logic might appear to suggest that an institution set up in statute, its powers, duties and responsibilities set out in statute and its first level of accountability to HM Treasury and ultimate ditto to Parliament itself ought to be constituted instead as a government department funded by the taxpayer (of whom there are vastly more than there are authorised and regulated industry practitioners, so each individual would pay far less to keep it afloat than is now the case). I also wonder if its real accountability in practice might be greater than it is now were its current legal status to be rescinded and replaced by government department status.

      • Not an excuse at all, my point is that legacy systems are not always fit for purpose. The answer is a costly rebuild – I’m sure you would have plenty to say on the industry funding a new regulatory system.

        Natwest were fined a huge amount but that was due to hundreds of thousand of customers being directly affected, a completely different situation from two firms complaining their data is out of date.

        You only have liability for poor advice. You cant be liable for doing the right thing. (not sure why you raised that here anyway).

        You then say its not worth throwing money at them. Fine. But you cant then complain that their systems are not fit for purpose.

        • Indeed, although it is becoming increasingly evident that there are many other errors and anomalies on the Register and it does now look as though FCA will take its Register system apart and deal with it, although how long that might take, how effective the result might be and how much the exercise will cost are all open questions for the foreseeable future.

          The NatWest case is indeed different, albeit only in scope. I suspect that the absurd cost quoted by FCA for altering a handful of Register entries includes the amendment of hundreds if not thousands of others for which the complainants cannot be deemed responsible; they have, after all, complained only about their own entries.

          I should, however, point out that the data concerned in the complaint was not about “firms” but about individuals and it was not “out of date” but just plain wrong – and FSA had admitted in writing that it was misleading, unfair and unclear way back in 2009 but still declined to remove it on cost grounds, yet it agreed to review it (although failed to do so) when it redesigned its Register, despite its obvious awareness that the cost issue, such as it was, would not have gone away in the interim.

        • “You only have liability for poor advice. You cant be liable for doing the right thing”
          Really ? Uuummmm ! then wants with all the FSCS levies ? is that not my unlimited liability for others poor advice and the FCA’s bad regulation ?
          And I put it in to prove a point the FCA is not fit for purpose, and for the fact it does not know what to do with the information it gets and holds, the very reason why, in most instances they are so far behind the gain line….. you know, horse and stable door !

          Cant complain, if there systems are crap because I don’t want to give them more money……….. what kind of argument is that ?

          They take and do what the bloody hell they like, I or my clients have no choice in that, what do they do with the 1.5 billion they get already ? lets not forget what else they cost the industry in regulatory failures, (I’m sure an educated man like you doesn’t need me to list them), these little IT mishaps may be small but it sounds as if there is something very dark lerking in the corner.

          Long may your love affair with the FCA continue…..to me it will always be the one night stand that left a little prezzie i will never be rid of……..

        • Perhaps it’s the other way around, in that some people feel that value for the money paid to FSA/FCA by the industry in the form of regulatory fees is poor for a number of reasons, not least that its systems (GABRIEL, TARDIS, &c.) remain woefully inadequate after so many years; for example, what’s now known as the Financial Services Register took FSA at least 2½ years to launch from the time of its own inception (when it replaced PIA) and had therefore to be effectively backdated from its 2004 launch date to 1 December 2001. For that reason alone, it is surely not unreasonable to question why it remains so fundamentally flawed despite having existed for so many years, especially given that unlimited funds are available at all times to FSA/FCA to ensure that it’s as near-perfect as possible? Sadly, however, one reason for the raft of ongoing shortcomings of the Register appears to be the obdurate self-righteous arrogance of the institution that’s charged in statute with responsibility for creating and maintaining it ACCURATELY at all times and which has almost always been most reluctant to accept criticism.

  6. Forgive me if I am wrong but how can an organisation (that is meant to regulate an industry) complain they cant afford to keep a register up to date ( with basic information open to the public) when they expect IFA’s to regularly provide up to date information that continues to change. regulary

    • Oh, with the utmost ease, believe me! Of course they’re not actually saying that they can’t afford to keep their Register up to date (even though they’re obviously not doing it as they should); what they ARE saying is that what they input into it is correct regardless of being on occasion “misleading, unfair and unclear” as its predecessor has admitted in writing”, irrespective of what anyone might think or know to the contrary and ignoring that it is sometimes demonstrably incorrect. How so? Because FSA/FCA believes that it knows better than anyone what’s correct and what isn’t, as well as what everything entered on its Register is supposed to mean. The problem with that is that it publishes the Register not for its own benefit but for that of the consumer and the industry whose authorised and regulated practitioners it records there!

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