The Financial Conduct Authority has found itself in trouble after it incorrectly censured an adviser for being ‘uncooperative’ when dealing with a CF30 application.
In a recent Complaints Commissioner decision, the FCA was criticised by its watchdog after it wrongly noted that an adviser had refused to cooperate with its requests.
The issue arose when the complainant submitted a CF30 application to the regulator in 2019. The CF30 is an 'approved person' who has regulatory permission to perform the 'customer function' at advice firms.
But the FCA had concerns about the applicant and the due diligence carried out by the advice firm.
The regulator got in contact with the individual to request further information, which it said needed to be provided within 10 days and if this was not possible, there were three further options available.
The complainant chose to accept ‘option 1’ which was to withdraw the application altogether.
But the FCA’s authorisations, supervision and complaints Team concluded that they ‘failed to cooperate with the regulator when invited to’.
The supervision team considered this as a potential breach of Principle 11 and sent the individual an email reminding them about the need to be cooperative with the FCA and their responsibilities under SMCR
Principle 11 states that “a firm must deal with its regulators in an open and cooperative way, and must disclose to the appropriate regulator appropriately anything relating to the firm of which that regulator would reasonably expect notice”.
The FCA stated: “[...] alongside the case officer not receiving the necessary information and not being able to substantiate if you had conducted adequate due diligence, I believe it was reasonable to expect the matter to be highlighted to supervision for their consideration.”
Commissioner findings
But Complaints Commissioner Amerdeep Somal disagreed with the FCA that the complainant’s behaviour could be seen as being ‘uncooperative’ and did not think that the matter needed to be highlighted with supervision at all.
The commissioner said she had not received any emails that evidenced uncooperative behaviour and said the adviser had accepted the FCA’s decision on the CF30 application and acted accordingly.
In addition, Ms Somal raised concerns with the FCA’s application and interpretation of Principle 11 in this case.
She said evidence had shown the individual was open to discussing the matter with authorisations and that there was nothing to suggest the complainant had declined to discuss the matter further when invited to do so.
Ms Somal said: “I find the FCA were wrong to question your honesty and integrity. It is also concerning that the FCA complaints team did not challenge this and investigate further when I would have expected them to do so.
“So, I am satisfied that there was likely no breach of Principle 11 on your part.”
She recommended that the regulator increase its payment for the inconvenience and trouble and upset caused from £50 to £75. The FCA agreed to this.
