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FCA slammed over ‘unacceptable’ record keeping

Complaints Commissioner criticises FCA over handwritten meeting notes

The FCA has agreed to keep electronic records of “significant meetings” after being criticised by the Complaints Commissioner for only having handwritten notes of a meeting with a regulated firm’s chief executive.

The commissioner was evaluating a complaint from a former non-executive chair at an unnamed firm that was investigated by the regulator. The person had been removed as chair by the firm’s board because other employees thought they had an “unconstructive” approach to the FCA’s investigation.

The person complained to FCA in December 2015 about the enforcement process taking too long and that it was too reliant on “separate off the record meetings” with the firm’s chief executive.

The person asked for a full internal review to ensure the FCA used it powers correctly and responsibly in the case.

The FCA deferred the complaint until it had finished the enforcement action. It later responded in October 2016 and did not uphold the complaint. The regulator’s complaints team did not think the FCA had acted unreasonably in how it conducted its investigation into the firm and the actions it took.

The decision was then referred to the commissioner who was asked to look into:

  • the minutes of the off the record meetings with the firm’s chief executive
  • the FCA’s reliance on a skilled person’s report “without any contact with the non-executive directors”
  • the resulting “failure of the FCA to understand the beneficial changes that had taken place in the firm” which the complainant said was an example of bad regulation
  • the time taken to respond to the complaint

The commissioner partially upheld the complaint.

In his decision, commissioner Antony Townsend recommended the FCA review its approach to record keeping and make sure all “significant meetings” are recorded electronically as soon as possible after they have occurred.

The decision says: “I also note the FCA’s record of the meeting with you and the chief executive on 25 November 2015 was held only in handwritten form in notebooks and was not typed up until requested by me as part of my review – on the grounds that the handwritten notes were hard to decipher.”

It says: “In my view this is poor practice and I am not persuaded by the FCA’s explanation that it is justified because it would impede progress if investigators had to type notes of every meeting/all they made.”

The decision adds: “The dangers of not doing so – loss of information due to the passage of time, unclear handwriting, staff turnover and faded memories – are readily apparent. In my view this practice is not acceptable.”

The commissioner also recommended the FCA apologise to the complainant for failing to address one part of their complaint and pay them £75 for any distress and inconvenience caused by delays in handling the complaint.

Townsend also recommended the FCA review its processes and quality checks to make sure all aspects of a complaint are addressed and that when draft letters are amended, that response times are also updated.

Townsend says: “I am pleased to note that, in response to my preliminary decision, the FCA has agreed to accept and implement all my recommendations. You should shortly hear from them about the apology and offer of payment. I realise you will be disappointed by my decision overall but I hope you will understand how I have reached it.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 5th May 2017 at 9:01 am

    A couple of years ago (maybe it was more) Paolo Standerwick announced upon the arrival at his offices of a couple of compliance inspectors from the FSA that, for the avoidance of any doubt or disagreement after the event as to who had said what, he would be tape recording the entire proceedings. Sounds reasonable enough, does it not? Shouldn’t regulation be a two way street?

    The response of said inspectors was to dredge up that hoary old chestnut of “failing to deal with the regulator in an open and cooperative manner” (in quite what way was wasn’t explained), declare that no recordings must be made (of what were they afraid?) and threaten all sorts of dire retribution if the equipment was not deactivated forthwith (sounds to me very much like a blatant abuse of power). Draw your own conclusions.

  2. £75 for distress and inconvenience?

    I think that is about a third of what FOS would award a consumer.

  3. Andrew F Smith 5th May 2017 at 2:23 pm

    I was just reading an upper tribunal decision where a trader lost their interim permission because of inadequate record keeping. It seemed a much worse case than this, but still, this doesn’t feel even-handed.

  4. Anthony Badaloo 5th May 2017 at 4:06 pm

    FCA Staff Exposed In Tax Evasion Scandal http://bit.ly/FCAEvade

  5. Don’t do as I do, just do as I say!

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