Campaigners have criticised the Financial Conduct Authority’s (FCA) “worthless” complaints scheme and called on the City regulator chair Charles Randell to consider stepping down.
In an open letter to Randell, Gina and Alan Miller, who run the ‘True and Fair’ campaign, which aims to achieve better consumer outcomes from financial services, criticised the current version of the scheme for making the likelihood of compensation virtually impossible.
They highlighted the FCA’s wording that any compensatory payment should normally be made only in circumstances in which an individual has “suffered a quantifiable financial loss caused solely or primarily by the actions or inaction of the FCA” or that “any such payment made would not, typically, cover the full loss”.
The Millers said that they believe the ‘sole or primary cause of loss’ qualification makes it inevitable that almost no claimant could ever again be monetarily compensated for the contributing factor of the FCA’s own regulatory failures, as the financial loss will necessarily involve a third-party firm/individual, and this makes the whole scheme 100 per cent worthless in practise.
In addition, they said that they are “deeply concerned” that the FCA’s approach said that “where an impact is more severe or prolonged, a payment in the region of £100-£300 may be appropriate” and that “in most cases where a complaint is upheld, we consider that an apology and taking action to address the complaint is the most appropriate remedy.”
The Millers questioned as to how the FCA could assess cases in advance and why, although the consultation was not launched until July 2020, the FCA chose to publish its new approach online on 16 June 2020, with a further update three days later, a month before the consultation commenced.
“These are serious and substantive issues which give rise to legitimate and urgent concerns about the processes, quality of decision-making, and accountability of the FCA, and of you as its chair,” the Millers’ open letter said.
“Moreover, the evidence we have highlighted in this letter is bound to give rise to the suspicion that you, as chair of the FCA, are seeking to introduce the FCA’s proposed new scheme through the back door, without proper scrutiny or debate.
“As longstanding campaigners who are committed to securing improved financial consumer protection, treating customers fairly, and a better regulated industry we are truly astonished by your actions in relation to the FCA complaints scheme.
“These do not seem to us to be the hallmarks of a considered and effective regulator, or the action of a fit and proper person.
“In view of the immense gravity of the issues that we have identified, which we believe are anti-consumer and represent an incorrect and potentially unlawful interpretation of the Financial Services Act 2012, we require a reply that answers each of the points raised, clearly and comprehensively, within 14 days of the date of this letter.
“Should it be confirmed that there has been a lack of proper regard for consumers and that your own poor leadership and judgment as chair of the FCA may have contributed to this, then we hope you will not hesitate to do the right thing and, in such circumstances, will consider your own position.”
An FCA spokesperson said that the regulator is sending the Millers a reply which responds to the issues about the complaints scheme they have raised.
“We have consulted on the changes to the scheme to simplify the wording of the scheme and to provide more clarity about how complaints will be dealt with in particular where ex gratia payments will be made,” the spokesperson said.
“The scheme was set up to investigate complaints against the FCA and was not intended to be a compensation scheme of last resort when things go wrong.
“We investigate every complaint fully and they can result in changes to the way we operate.”