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FSA complaint over adviser supervision failure rejected

The Complaints Commissioner has rejected a complaint from a client alleging the FSA’s failure to adequately supervise their adviser has resulted in “considerable” financial losses.

A letter from Sir Anthony Holland, published today, reveals an unnamed client brought a complaint against the FSA alleging the regulator had failed in its duty to protect individuals who engage with authorised firms.

The client claimed they had lost “a considerable amount of money” as a result of poor recommendations by the unnamed adviser, which is now in administration, and poor management of the client’s investments.

The client wanted the FSA to compensate them for their losses.

The client argued the regulator was at least partially responsible for the investment recommendations made by the adviser, as the adviser failed to fully establish the client’s attitude to risk or spell out the charges for advice.

They said that if the firm had been adequately supervised, these failures would have been clear.

The firm was categorised as a ‘low impact firm’ by the regulator. At one stage the regulator did require the firm to appoint an external compliance consultant. However the FSA said it could not go into detail about its dealings with the firm due to confidentiality rules.

In his letter Holland writes: “Whilst I appreciate why you hold the FSA at least partly responsible for the losses you say you have incurred, you have not in my opinion provided sufficient, if any, evidence to show the losses you have experienced were the direct result of failure by the FSA to supervise adequately the firm.”

He added: “The information you have provided only supports a complaint of poor service and/or  advice on the part of the financial adviser rather than inadequate supervision on the part of the FSA.”

Holland said if the client feels they were given unsuitable advice they should refer their complaint to the Financial Services Compensation Scheme.


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

  1. The next step is to go to the High Court to sue the Government for failure to adequately regulate the regulator that has failed to regulate the firm that had failed to regulate the adviser

  2. Someone should explain to this client that the FSA is untouchable!

  3. Glen, there’s some sound thinking there mate, I believe that if all the dissafected clients and advisers club together Regulatory Legal could win that for us…. And then I woke up and found myself seriously out of pocket with a mad regulator and an ever shrinking income.

  4. If the client feels that he was given unsuitable advice then he should complain to the ombudsman, who will investigate. If this has already happened, and the FOS found no fault, then he must accept that judgement. If the ombudsman finds in his favour, and the firm is no longer in business, then the FSCS will pay the compensation and send the bill to all the advisers who remain in business. The idea of pursuing the FSA or the government is just plain stupid.

  5. Mr Kane, is it also stupid that the FSCS has a cap on compensation.

    Where is TCF, where is consumer protection?

    Nick is correct.

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