Financial Conduct Authority  

FCA told to compensate over 'seriously inaccurate' register

In the previous case the complainant had checked the register before investing and "convinced themselves the company was authorised", an error the FCA accepted might have led to the consumer choosing not to invest if the register had been accurate. 

Mr Townsend held that whilst the associate at the FCA call centre had given good advice and the consumer should have waited for a reply from the Austrian authority before investing, the failings of the regulator had still contributed to the loss and therefore recommended the City-watchdog pay compensation.

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He said: "I have to weigh the fact that the FSA made two serious errors; that had the firm not been erroneously shown on the FCA’s register it could not have been cloned in the way it was; and that the FCA complaints team did not uncover the extent of the regulatory failings.

"While it is understandable that the FCA should be protected from general liability for consumers’ losses, this is not an ordinary case.

"The FCA (and the FSA before it) for twelve years showed a deauthorised Austrian company as registered despite having information that it should not be.

"Although the FCA cannot be held responsible for the criminal behaviour of others, the FSA’s serious failings contributed to your financial loss.

"While I do not consider that the FCA should be held responsible for the totality of your loss, in my preliminary report I recommended that it should make an ex gratia payment to you of 50 per cent of your loss." 

The FCA argued in response to the recommendation that, as a public body, it has no obligation, in general law or under the Financial Services and Markets Act 2000, to compensate consumers for errors under the register and the "direct cause" of the complainant's loss was her own actions. 

However, the complaints commissioner did not agree with the regulator's argument, accepting there should not be a "general warranty" for the accuracy of the register but finding the FCA’s failings in this case with respect of the register were "unusually serious and significant".  

The complaints commissioner said he was aware the FCA had now taken steps to provide further training to call associates in its complaints centre on handling these issues.

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