The Financial Conduct Authority has been told to pay an adviser more than £6,000 after its register gave the impression their firm was suspended.
But the FCA does not accepted this recommendation by the Complaints Commissioner on the basis it shouldn’t have to shell out large sums every time the register contains an honest mistake, especially if no financial loss can be proven to have taken place as a result of the error.
According to the complaint the FCA’s register displayed a former trading name of the firm, which was suspended, without making it clear the suspension related to a firm it was no longer associated with.
The complainant, who has not been identified, claims the average consumer would assume the firm was suspended and decide not to do business with it without scrolling down for more details.
Complaints Commissioner Antony Townsend was asked to look into the issue after the FCA said most people would be able to distinguish between the current and previous trading names of the firm.
After examining the issue he found in favour of the firm, saying the information was “misleading” and that a consumer would have had to look deeper into the entry to discover the suspended trading name was a former one.
Mr Townsend said: “The appointed representative in this case was a victim of an unusual set of circumstances which were not envisaged when the on-line register was designed.
“While I accepted that the FCA entered the information on its register in good faith, the fact is that the way it was displayed was obviously misleading, and the FCA did not correct it despite being given two opportunities.
“I believe that your AR’s fears about the risks to her reputation and as such to the viability of her business were reasonable while the register was displaying misleading information and she should be compensated for this, especially in light of the fact that the FCA had two opportunities to resolve the issues.”
Mr Townsend told the FCA to apologise for not having addressed the issue more quickly and pay £500 for the distress caused.
He also told the regulator to pay £5,839.29 in recognition of the loss of business, calculated on the basis of the appointed representative’s average annual new business income over a five-year period on a pro rata basis for the time it took the FCA to rectify the register.
This was also reduced by 25 per cent to account for the fact the adviser was returning to work with a new principal and there was likely to be a reduction in her income.
But while the FCA accepted the payment of £500 it did not accept the larger payment for the loss of business.
In a statement the FCA said: “In a case where compensation might be appropriate, we would expect it to be shown that any financial loss ‘has directly resulted from the regulator’s error’ to use wording from the Commissioner’s published policy.
“A prospective client may well have paid more attention to these ‘status’ entries than to those under the ‘names’ column.
“The register holds hundreds of thousands of entries for firms and individuals. Robust processes have been designed to remove the risk of errors occurring.
“Correcting these matters should not, however, create an expectation that substantial compensation will be available where errors occur.”
damian.fantato@ft.com
