FCA’s honest mistake angers advisers

Emma Ann Hughes

Emma Ann Hughes

Anybody can make an honest mistake – even the nation’s financial services regulator.

The Complaints Commissioner concluded this week that the regulator’s register misled the public to think an adviser’s firm was suspended.

When an adviser who was unhappy with the way her firm was recorded on the Financial Conduct Authority’s register complained to the Complaints Commissioner the regulator was told to pay her more than £6,000.

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Rather than accept the commissioner’s conclusion, the FCA said 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.

The former firm was suspended and the register failed to make it clear the adviser’s new firm was no longer associated with it.

The complainant, who has not been identified, claims the average consumer would assume the new firm was suspended and decide not to do business with it.

Complaints Commissioner Antony Townsend agreed with the adviser 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: “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.”

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 loss of business.

Rather than accept the request for compensation, 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.”

In the comments section of our website, advisers were swift to reveal their anger at the Financial Conduct Authority’s refusal to accept the Complaints Commissioner’s request it compensate the advice firm.