Financial Conduct Authority  

FCA stays controversial changes to regulatory compensation

FCA stays controversial changes to regulatory compensation

Controversial changes to compensation awarded for regulatory failings at the Financial Conduct Authority have been pushed to next summer in light of two damning reviews concerning the City watchdog. 

When they first proposed the changes in July the FCA, Prudential Regulation Authority and the Bank of England said they intended to make the complaints process for regulatory failings more accessible to consumers.

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. 

The consultation closed in October and the FCA originally intended to bring the revised complaints rules into force "as soon as reasonably practicable".

But in November board minutes published on its website yesterday (December 23) the regulator said it was now pushing the changes to summer next year, amid the findings of two recent independent investigations into its handling of the London Capital & Finance and Connaught scandals. 

The FCA said: "The board was cognisant of the concerns raised by some respondents regarding the timing of the amendments to the Complaints Scheme described in consultation paper CP20/11.

"In light of this, it was proposed that the policy statement on the consultation should not be published until towards the end of Q2 2021."

The City watchdog found itself in hot water this month when the two investigations found it could have done more to protect consumers and identified "significant gaps and weaknesses" in its policies and practices.  

The long-awaited review by Dame Elizabeth Gloster into the FCA's handling of the London Capital & Finance mini-bond scandal warned its handling of information from third parties regarding the business was "wholly deficient".

The report concluded the bondholders were "entitled to expect, and receive, more protection from the regulatory regime in relation to an FCA authorised firm than that which, in fact, was delivered by the FCA". 

Similar failings were identified in a review of the regulator's role in the collapse of the scandal-embroiled Connaught fund, with the investigation finding its regulation of entities and individuals connected to the fund was "not appropriate or effective". 

FCA chairman Charles Randell admitted there were a "number of things" the regulator could have done better and offered "profound" apologies for the regulator's mistakes.  

rachel.mortimer@ft.com 

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