On the back of the Complaints Commissioner’s report into the handling of compensation to London Capital & Finance (LCF) victims, campaigners Gina and Alan Miller have written an open letter to the Treasury Select Committee (TSC) calling for action against the Financial Conduct Authority (FCA).
The commissioner’s report concluded that there were “significant problems” with the FCA Register as it does not display whether a firm’s activities are regulated; and with the watchdog’s complaints scheme which was found to be “unjust” and leaving consumers virtually unable to ever secure compensation.
As a result, the True and Fair Campaign co-founders have asked the TSC to issue a “Kingman style independent review of the FCA”.
The Kingman review refers to an independent investigation into the Financial Reporting Council (FRC) submitted by Sir John Kingman, who suggested for the council to be replaced with an “independent statutory regulator”.
The Millers said in their letter: “We wish to bring to the committee’s attention the Complaints Commissioner’s final report into the Financial Conduct Authority’s oversight of London Capital & Finance which proves the FCA has been acting both illegally and illicitly and appeared to have misled the Treasury Select Committee – an issue we wrote to you about on 8 September 2020.”
The two campaigners raised three points they would like the committee to scrutinise the regulator over:
- The alleged illegality of the FCA’s complaints scheme;
- The introduction of a ‘sole or primary cause’ test to assess compensation without any prior consultation on the matter; and,
- The fact that they believe the FCA and its former chair misled the TSC in March 2021 when they claimed the regulator’s ‘Approach to Remedies’ was “consistent, appropriate and proportionate”, as the commissioner found otherwise.
Independent review
The Millers added in their letter: “The complaints scheme involves an independent complaints commissioner who, despite being appointed by the FCA, frequently has their recommendations ignored by the FCA as these are non-binding on the FCA.
“The real reason for the FCA’s decision to act illegally is exposed within the report – ‘The FCA has asked me to have regard to the wider implications of an approach to ex gratia compensation which would generally lead to the FCA paying compensation when it is not the primary cause of the loss.’
“The FCA therefore appears to have deliberately sought to make the scheme worthless and anti-consumer by applying an illegal test, even though the amounts actually paid by the FCA are derisory anyway.
“The sum paid by the FCA over a recent 18-month period in connection with the complaints scheme amounted to just £13,475 ($18,273, €16,000) – equivalent to just £7 per complaint. This compares with the costs of running the Office of the Complaints Commissioner alone which totalled £516,119 last year – equivalent to £1,313 per enquiry or complaint.
“It is our view that they need to answer these charges and to explain to the committee how the board approved such changes and if they are going to act on the Complaints Commissioner’s recommendations.
“And if not, why not. We are of the firm belief that the mountain of evidence indicating that the FCA is not fit for purpose, should now result in the committee backing the call for Kingman style independent review of the FCA, mandated by the Treasury.”
A spokesperson for the FCA told International Adviser: “On 15 February 2022, we received the Financial Regulators Complaints Commissioner’s final report on the London Capital & Finance (LCF) complaints that have been referred to the Office of the Complaints Commissioner (OCC).
“We are considering the final report and will respond to the Complaints Commissioner, and publish our response, by 15 March 2022.”
