Financial Conduct Authority  

FCA clashes with complaints commissioner

FCA clashes with complaints commissioner

The Financial Conduct Authority has been accused by the Financial Regulators Complaints Commissioner of siding with a bank rather than probing the provider's behaviour.

The complaint, which was first submitted to the commissioner in July 2017, involved a claim for consequential loss under the interest rate hedging products compensation scheme.

The complaint was escalated to the commissioner after the FCA refused to direct the bank in question to deal with the claim under the IRHP Compensation Scheme.

The complainant suggested the regulator was failing to ensure banks accepted responsibility for their misconduct.

The main issue addressed in the complaint was the redress offered by the bank in a letter to the complainant in March 2015, but which enforced a 40-day time limit for representations to be submitted.

The customer reportedly advised they intended to begin legal proceedings against the bank and rejected the offer of redress under the scheme.

At a later date when the customer made a claim for consequential loss under the scheme the bank cited the time limit as grounds for refusal.

In its representation to the complaint commissioner, the complainant suggested the bank’s time limit was contrary to the agreement reached between the FCA and the regulator should therefore have intervened.  

The commissioner upheld the complaint and asked the regulator to reconsider the matter and make enquiries of the bank in question.

In its initial response to the commissioner, the FCA said it had contacted the bank and ascertained no claimants under the IRHP Redress Scheme had been put at a disadvantage by the bank's application of the 40-day time limit.  

But the commissioner claimed the FCA had taken the position of defending the bank rather than considering whether something had gone wrong.

Complaints commissioner Antony Townsend said he did not think the FCA has satisfactorily addressed the complainant's concerns.

Mr Townsend said: "In my view, there is considerable material to suggest that the information between the bank and its customers was not as good as it should have been.

"In my view, that ought to have been a matter of legitimate concern to the regulator, not least because of its responsibilities for oversight of the scheme."

Mr Townsend said he was concerned that the FCA's approach throughout the matter had been to advance arguments for why the bank’s rejection of the claim might have been justified, which he emphasised was not the regulator’s role, rather than addressing the systemic issues which the complaint raised.

He added: "I can only hope that the FCA will undertake its lessons learned exercise in a more open-minded fashion."

However the FCA argued it did not advance arguments justifying the bank's position that the bank had not used itself.

The FCA stated: "It was, and is, our judgment that the claimant’s rejection of the application of the scheme, on legal advice, and its clear intention to litigate instead influenced the bank's decision to enforce the deadline in this case.