On 5 December 2016, the Complaints Commissioner (the “Commissioner”) issued a letter setting out its findings in a complaint against the Financial Conduct Authority (the “FCA”). The complaint related to losses suffered by a customer of a financial adviser firm following the FCA’s decision to allow the firm to cease being authorised with effect from 4 March 2014 and subsequently to dissolve. As a result of this decision, the complainant was unable to recover an award of £99,000 awarded by the Financial Ombudsman Service, either from the firm or its insurance provider. As the level of award was higher than the maximum level payable by the Financial Services Compensation Scheme, the complainant would be unable to recoup the full award.
The Commissioner found that the FCA had not acted unreasonably in approving the firm’s application for cancellation of permissions. However, it suggested that the FCA consider requiring firms seeking to cancel their permissions to demonstrate that they have notified their professional indemnity insurance provider of all outstanding complaints (internal or external) against them, both when they submit their cancellation application and when the application is assessed by the FCA. The Commissioner indicated the FCA had accepted this suggestion and was considering adding steps to its processes to enhance the protection of consumers in future.
It is therefore possible that firms seeking to cancel their authorisation will in future need to provide the FCA with greater comfort in respect of complaints than is currently the case. Firms intending to deauthorise should factor this into their preparations.