Financial Conduct Authority  

FCA under fire for providing false information

FCA under fire for providing false information

The Financial Conduct Authority has apologised after its supervision hub provided incorrect information to an individual about a passporting firm.

The Complaints Commissioner upheld in part a complaint which alleged the FCA's register of financial services firms had shown a firm as an active company years after it was wound up and that the regulator had given incorrect information about where to turn to report the case.

The complainant, who is a Scottish resident, said the error meant they invested with a cloned firm due to the register showing the firm to be active, though not necessarily authorised.

The firm in question, dubbed Firm X, was an EEA based firm passported in from Germany, which was shown as an active company on the FCA register until January 16, 2020, even though the original company was wound up in 2018. 

The investor blamed the FCA's 'negligence' for their loss saying had they known there was no protection they would not have
invested. The complainant asked for financial compensation from the regulator.

But the FCA dismissed the complaint, saying at the time the investor checked the register and subsequently invested the FCA was not aware the entry on the register was problematic. Once it became aware of an issue with the firm the entry was removed, albeit after a delay.

It said this did not mean the FCA was liable for the financial losses the investor had suffered. 

The investor also complained that when they contacted the FCA's supervision hub they were told to contact the German regulator Bafin as it was a German firm.

The complainant was also told to contact Action Fraud, however the individual was unable to do so as a resident in Scotland as Action Fraud only covers cases for consumers in England and Wales. 

The Complaints Commissioner, Amerdeep Somal, partially upheld the complaint based on the fact that the individual had been wrongly advised by the FCA supervision hub.

But she did not deem it fair to investigate the complaint further with regards to the investment losses.

Somal said: "I have reviewed the information you have provided and the FCA file. I can see that it appears from the information reviewed that the FCA did try to assist you with your concerns about the firm by referring you to organisations who were more appropriately placed to assist you, but unfortunately these were incorrect referrals.

"I do find it concerning that the Supervision Hub did not obtain enough information from you and about your complaint to provide you with referrals to the correct organisation in Scotland to investigate fraud, being Police Scotland."

Somal noted the referral to Bafin was also incorrect as there was more than one German regulator for financial services that each deal with particular sectors and the one that would have been the correct one was Deutscher Industrie- und Handelskammertag (DIHK).