The Cypriot financial adviser in question had persuaded a couple to invest in a product that went into liquidation.
The couple claim the FCA failed in its duty of care to protect UK consumers and they should have been compensated.
They believed they were dealing with a regulated firm that was authorised to provide advice in the UK.
Difficult to navigate
In a decision, published on 21 November, commissioner Antony Townsend said: “I consider that the FCA’s register has been difficult to navigate, and lacking in readily comprehensible information for consumers.
“It would require considerable work for a consumer, on the basis of the bare information in the register, to understand that an FCA-registered firm was subject to different regulation, and different consumer protection arrangements, because of its EU status.”
Slow to act
Townsend also criticised a lack of openness in a decision letter from the FCA: “What is not apparent, but is very clear from the records, is that from around April 2011 there were growing concerns that the firm was acting outside its permissions, both in terms of the business that it was doing, and because it was not providing cross-border services but had “established” itself in the UK.”
He said the regulator “appeared to be a reluctant to bring the matter to a head” and “the records do not suggest that anyone stood back, established the facts, and considered what the best options were, until the second half of 2013”.
“The result was that the situation – and the potential risk – were allowed to continue for too long.”
Townsend continued: “I do not think that the FSA/FCA handled this matter well.”
However, he did not agree the FCA was responsible for the couple’s loss. Their decision to invest was three months before significant concerns emerged.
In addition to calling for greater clarity around the limitations of regulatory protections for passported firms, the commissioner recommended the FCA apologise for giving the impression of “powerlessness” and improve its interaction with foreign regulators.
The FCA also said it would reassess all of its EU relationships in the wake of Brexit and would apologise.
