The commissioner emphasised that the FCA’s complaints team had been “inadequately resourced and put under stress” as a result of the inaction and noted the situation had “considerably worsened” over the past year.
Complaints commissioner Antony Townsend also highlighted that he had “seen no evidence that the FCA has an effective system to prioritise complaints”.
And he slammed the FCA and Bank of England for failing to consult on improving the complaints scheme, including clarity on compensation, for four years.
Maladministration
Townsend made the criticisms in a case decision published this week where an unnamed adviser was dissatisfied with their treatment by the FCA after it published an unredacted enforcement notification identifying the firm and director.
Although a redacted version of the notification was subsequently issued, the details had already been reported in the financial media.
The case had taken almost two years to complete through the FCA’s complaints process and the adviser claimed they had been given at least seven handlers during that time, with many months of inaction throughout.
In the decision, the commissioner did not uphold complaints about why the adviser had been subject to enforcement action, or the FCA’s work in that regard.
However, he did recommend the FCA make a £750 ex gratia payment for distress and inconvenience arising from the publication and due to the complaint handling delays.
He also called for an apology from a member of the FCA’s executive committee for the delay and maladministration in the regulator’s processing of the complaint.
In response, the FCA published a statement which said: “The FCA accepts the complaints commissioner’s findings and recommendations in this case.
“A member of the FCA’s executive committee has written to the complainant to apologise and make arrangements for payment of the recommended ex gratia sum.
“The FCA is taking ongoing steps to address the complaints handling delays that the complaints commissioner has commented on in his final report, and we continue to liaise with the commissioner on this.”
No evidence of effective system
The criticisms about the complaints handling process in Townsend’s final report were stark in relation to the case and the overall situation at the regulator.
He noted that there was a clear lack of effective supervision of newly appointed investigators between April and October 2019.
“This was despite the complaints team’s initial recognition that your complaints were complex and required a senior investigator,” he said.
“A lack of support for inexperienced case handlers new to the complaints team appears to have contributed to the delays you experienced.”
He continued: “I have also seen no evidence that the FCA has an effective system to prioritise complaints or, if it does, that this was applied to your case.
“This is not to say that just because someone approaches me about delay they should ‘jump the queue’. However, where I have referred a case back to the FCA for further investigation, I would expect a level of prioritisation and a sense of urgency to be applied.
“This is not the first time that the complaints team has been under such pressures causing delay, as has been noted in my previous annual reports. However, the situation has considerably worsened over the past year.
“I note the additional measures the FCA has put in place to start to address this situation and I will be keeping this under careful review, and reporting on the situation publicly in my forthcoming annual report.”
Townsend commended the complaints team for identifying an approach to ex gratia payments for delay, based on the time taken against what would have been a reasonable time, however, he argued there had been basic failures to appropriately manage and supervise this case “that go beyond delay to maladministration”.
Inadequately resourced and under stress
As a result of the upheaval and constant delays the complainant was sceptical about how genuine the FCA’s apology was.
The commissioner agreed this could be the case, particularly if there were no noticeable improvements from the FCA, and called for the executive apology, noting the wider issues in the team.
“I am aware that the complaints team has seen a large increase in its workload and has been struggling to cope,” he said.
“I have not seen any evidence that suggests the failings I have identified arise from bias towards you personally. Rather, they are a measure of the difficulties the complaints team has been facing in general and show what happens when a team is inadequately resourced and put under stress.
“However, in view of the high turnover of staff and poor communication you experienced, with little or no activity on your file for many months, I recommend that you receive a further apology for delay from a member of the FCA’s executive committee.”
Unrealistic expectations
Townsend also raised his dissatisfaction with the FCA and Bank of England on how compensation could be awarded and calculated under the current system, something which he raised many times.
“In 2016, I discussed with the FCA board the need for greater clarity about the circumstances in which such compensation might be awarded, and the limitations on such awards.
“Four years later, and despite several further discussions, the FCA and the Bank of England have still not issued a consultation on proposals to improve the complaints scheme, including clarity on compensation.
“The lack of clarity means that individuals may have unrealistic expectations about the compensation they might receive; and there is no clear published set of principles against which the regulators – and I – can consider whether or not an award is justified,” he concluded.
