The Financial Services Authority has apologised after the Complaints Commissioner upheld a case against it for ‘unprofessionally’ ambushing a firm with accusations at a meeting.
According to the decision presented by Complaints Commissioner Sir Anthony Holland, members of the FSA failed to disclose the reasons behind a meeting with a firm despite specific requests from that firm beforehand.
In an email to the firm, an FSA employee requested a meeting “to discuss [suspicious transaction report] requirements” at the FSA’s offices. Unbeknownst to the firm, the FSA was actually considering taking action against the firm due to failure to submit such a report.
However, even when a member of the firm asked for more specific reasons behind the meeting the FSA did not clarify. Instead, FSA employees discussed over email why it would be better to have the meeting at the firm’s offices.
One unnamed employee said in an email: “Since we’re going to bring up a specific incidence we could attend the meeting at their place so we can mention the incident to them and then if we were there, it would allow them access to their files regarding the incident.”
Sir Anthony said in his decision: “An ambush by a regulator of the regulated is not generally an approved way to proceed at a meeting such as the one that I am considering here.
“I have a suspicion that the complainants felt that was the reality and that feeling produced what followed, to everyone’s disadvantage.”
At the meeting itself, members of the firm reacted as would be expected when one FSA employee - referred to as Person B in the Commissioner’s decision, repeatedly and aggressively pressed them for explanations of why they had not submitted a STR for a specific trade.
Person B allegedly also said “We have put people in jail for less”, at which point the lawyer representing the firm began to take a more defensive and vocal stance in the meeting room.
Person B later became exasperated and told the lawyer - Person W - to leave the room, saying Person W’s clients would have to also go outside to speak with the lawyer.
Sir Anthony upheld five complaints brought against the FSA and ordered the regulator to apologise to the firm and Person W for its employees’ conduct and for “ambushing” the firm with accusations of wrongdoing.
Failure to submit a STR is not itself a criminal act.
The FSA said in its response: “It is part of the FSA’s role as regulator to examine the conduct of regulated firms when it has legitimate reasons for doing so.
“In this case, however, mistaken judgements made before the visit to the firm were compounded by poor handling by our staff of a difficult situation.
“This should not have happened and is not representative of the behaviour we expect to adhere to in our dealings with regulated firms.”
