MPs face calls to suspend 'scandalous' FCA consultation

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MPs face calls to suspend 'scandalous' FCA consultation
ByRachel Mortimer

MPs are facing calls to suspend an ongoing consultation which could see compensation awarded to victims of regulatory failings at the Financial Conduct Authority capped at £10,000.  

In July the City-watchdog launched an eight-week consultation proposing changes to the way in which it makes compensation payments to consumers in cases of regulatory shortcomings. 

Teaming up with the Prudential Regulation Authority and the Bank of England, the FCA said the revised scheme would ensure the complaints process was more accessible to its users - but the proposals would also see the maximum amount of compensation for financial loss capped at £10,000 in most cases. 

The regulatory complaints scheme allows consumers and firms to complain about the way regulators have acted, but the payments are often small. 

In an open letter to the Treasury select committee published today (September 9) campaigners Gina and Alan Miller branded the proposals as "intellectually dishonest and morally questionable" and called for the consultation to be suspended. 

The True and Fair Campaign led by the Millers also criticised the eight-week timescale of the consultation which had taken place over the summer holidays and during an "unprecedented pandemic". 

Ms Miller said: "It is scandalous that the FCA is once again acting in an anti-consumer manner by attempting to disadvantage victims of their own regulatory failings.

"Who could possibly have thought it sensible, after a litany of financial scandals, compounded by a global pandemic that has damaged financial services businesses and consumers alike, for the FCA to hold a consultation on its own performance in the depths of the summer holidays?"

Ms Miller called instead for the consultation to be suspended until the findings of three ongoing independent investigations, namely into the HBOS Reading scandal, London Capital & Finance and Connaught, were published. 

Mr Miller said: "We agree there needs to be a review of this compensation scheme, not least due to the pitifully low pay-outs, which has seen the total amount paid out by the FCA over the last 18 months to successful complainants total just £13,475.

"But the review should be conducted in a comprehensive, considered, and objective manner. Public confidence demands that this consultation delivers on what it says it is – an opportunity for victims of financial wrongdoing to seek redress."

An FCA spokesperson said the regulator would be considering all comments as part of its consultation before "finalising its approach". 

The spokesperson said: "Between January 2017 and December 2019, the majority of compensation payments were under £250, with the most common payment being £50. Over the same period, three complainants received payments of more than £10,000.

"Under our proposals we would expect no one individual complaint to normally exceed £10,000, although exceptionally it would still be possible to have higher sums."