FCA defers London Capital & Finance complaints investigation
The regulator says the delay in processing of complaints in 2018/19 reflects the rise in complaints volumes, due to the higher number of complaints involving LCF and Collateral.
The UK Financial Conduct Authority (FCA) has posted its response to a rather critical report by the Complaints Commissioner.
In his Annual Report, the Commissioner outlined four key themes:
- Problems with the Financial Services Register.
- The adequacy of information given to regulated firms and individual complainants.
- Concerns about the speed and adequacy of responses to information.
- Problems with delays in complaint handling.
The Commissioner reported:
“The Commissioner acknowledges that individual members of the FCA’s Complaints Team have been working hard and conscientiously, but the fact is that – not for the first time – the FCA as an organisation has failed to resource its Complaints Team adequately, with the result that complainants – many of who are anxious and/or angry and/or vulnerable – have found that the Scheme has exacerbated their difficulties.
The FCA is not currently meeting the complaints handling requirement for prompt handling which it requires of those it regulates. It has, however, acknowledged these shortcomings, and at the time of writing this report it has recruited additional staff who are being brought in to the team.”
In its response, the FCA says that in 2018-19 it received 1,075 complaints, marking a significant increase on previous years. This increase, the regulator explains, was largely due to the number of complaints involving two firms, London Capital & Finance PLC (LCF) and the Collateral Companies (Collateral). These two firms went into administration which prompted significant numbers of their investors to complain to the FCA (a total of 550).
The complaints team has seen a rise in both volumes and complexity of complaints. This has led to delays in processing them, the FCA says.
During the year, the FCA closed 718 complaints, up from 575 in the previous year. Of these, 130 complaints were upheld or partially upheld and 249 complaints were not upheld. The balance of 588 complaints were either deferred or not investigated.
The FCA has deferred investigating the complaints about LCF and Collateral pending the outcome of related ongoing FCA investigations.
The regulator notes that it is not always necessary for an investigation to conclude before it can investigate a complaint. But the FCA notes that it needs to be sure that its investigations do not prejudice the ongoing action. The FCA regularly reviews its deferral decisions to ensure that it consider these complaints under the Complaints Scheme as soon as possible. The FCA will review deferred cases every 6 months to ensure that it is still appropriate to defer the complaints.
The Commissioner reviewed 71 complaints in the year and disagreed, or partially disagreed, with the FCA decision in 18 cases. This represents 25% of the cases he reviewed and just under 5% of the complaints the FCA investigated that led to substantive conclusions.