The Financial Conduct Authority has made changes to the service it runs to allow companies to buy data from its register, following a complaint to the Financial Services Complaints Commissioner.
The issue came to light after a woman complained the FCA had not acted in a timely manner by removing a financial adviser from the register.
The adviser had not forwarded relevant information to the woman’s insurance provider, which ultimately invalidated her late husband’s life insurance cover and meant he was not able to successfully claim on the policy on his death.
Earlier that year the advice firm had signed an undertaking not to carry out any regulated activities after the FCA had become aware their firm had no professional indemnity cover.
But the woman’s insurance provider, which had bought information from the FCA’s register, said the information it received from the regulator said that while the individual was no longer authorised, their firm was, and it was on this understanding that it did business with the firm.
However at the time in question, neither the firm nor the individual were authorised to carry out advice.
Complaints commissioner Antony Townsend said the provider should have been aware the information it had bought from the FCA did not include all of the details needed to determine the authorisation status of the firm, through a note which accompanied the information it purchased.
He said: “Nonetheless, the fact that clearly significant information was not included in the Register Extract Service does call into question its usefulness, given that (as I understand it) firms use it to update their records about the authorisation status of firms they do business with so that they do not have to consult the public register every time they deal with a firm.
“In discussions which I have had with the regulator, it has become clear that the RES has grown up organically over time, and that there was insufficient consideration given to the impact of the introduction of requirements upon the usefulness of the updates.
“The regulator has told me that, partly as a result of the facts that came to light in the course of investigating your complaint, they are now including restrictions and limitations in their data extracts to make it easier for firms to keep track of who they can do regulated business with.”
Mr Townsend said the risks posed by the previous system were highlighted by the fact that the firm had done business with 11 different providers and carried out 97 mortgage transactions after the requirement to stop carrying out regulated activity was imposed.
The FCA rolled out changes to the service in May 2017 and all current subscribers have been told about them.
damian.fantato@ft.com
