An adviser struck of the register over allegations of fraud has had their complaint against the Financial Conduct Authority upheld.
The adviser had been accused of fraud by an advice firm which had then refused to produce evidence to the police to back up its allegations.
But in the meantime the adviser was struck off the register by the FCA because of "serious misconduct" and declined a complaint by the adviser because it did not involve itself in "commercial or civil disputes".
The adviser - who has not been identified - took the issue to the FCA's watchdog, the Complaints Commissioner, which upheld the complaint.
Writing to the adviser, commissioner Antony Townsend said: "While there may have been commercial elements in the dispute between you and firm X, you made it quite clear that what you were reporting was – in your view – potentially a criminal matter which the police were investigating."
The regulator failed to recognise the information flagged by the adviser about the advice firm potentially had "significant regulatory implications", the commissioner warned.
Mr Townsend said: "On the face of it, a serious allegation had been made against you – a person who had been authorised by the FCA – and you had made a serious allegation against another person and the firm in relation to false accusations and a failure to co-operate with police inquiries.
"While the FCA could clearly not reach any immediate conclusions on the basis of your information, I am surprised that it did not consider that further inquiries would be wise."
Mr Townsend recommended the FCA reconsider the adviser's complaint.
According to the complaint the adviser was accused in 2018 of falsely submitting life applications to insurance companies with multiple false postcodes, which led to the adviser being "terminated from the FCA register for serious misconduct".
But the adviser told the FCA the firm was now refusing to produce evidence to the police or solicitors supporting the allegations.
The adviser said this withholding of evidence was hindering an ongoing criminal investigation of "fraud and embezzlement" against them, which allegedly totalled about £320,000.
It is not known what relationship, if any, exists between the adviser and the firm.
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