Regulation  

Watchdog flags concerns on FCA and Fos information sharing

Watchdog flags concerns on FCA and Fos information sharing

The Financial Conduct Authority has been told to discuss its policy of sharing information with the Financial Ombudsman Service after a complaint was made against the regulator.

Complaints commissioner Antony Townsend said the FCA and the Fos should discuss this issue after handling a complaint from a firm which was being investigated by the regulator over its investment business shortly before an ombudsman looked into a complaint against it.

The firm said the FCA had "illegally influenced" the Fos and its handling of the complaint after it found the regulator had received a copy of the ombudsman's preliminary decision and several high-level meetings had taken place between the two organisations where the firm and complaint had been discussed.

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Mr Townsend said he was unable to uphold the complaint because there was no clear evidence that the FCA had any "improper influence".

But at the same time he was unable to endorse the regulator's claim the interactions between the two bodies had been proper for the same reasons.

After reviewing the material involved he said it was hard to draw any firm conclusions, saying that unless it was decided that any interaction between the regulator and the ombudsman during a live case was improper then were would inevitably be grey areas.

He said: "I find the absence of a contemporaneous documentary explanation of the FCA’s purpose in sharing the information unsatisfactory.

"I have concerns about the apparent absence of published information about how and in what circumstances information about live ombudsman cases may be shared between the Fos and the FCA, coupled with the apparent absence of information in this particular case about any limitations on the use of that information, bearing in mind the fact that, as described above, more than one set of processes were in train.

"In the light of the points which I have made, I invite the FCA to consider discussing with the Fos whether there should be clear guidance about the circumstances in which information may be shared between the Fos and the FCA in advance of final ombudsman decisions, and about any limitations on information sharing between the two bodies, or within them; and whether, where the FCA is sharing information with the Fos, the norm should be that this will be made known to the parties, the reasons for any exceptions being recorded."

From January 2014, the FCA and the firm had been in "protracted and often contentious discussions" arising from the regulatory's concerns about the firm's approach to elements of its investment business, and whether or not the firm should restrict its activities.

Later that year the Fos upheld a complaint against the firm in matters which were "directly relevant" to those which the FCA was discussing with the business.

The firm then threatened a judicial review of this decision and an agreement was reached that the matter would be reconsidered by a different ombudsman.