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12 July 2017

The Financial Services Complaints Commissioner has suggested all telephone calls to the Financial Conduct Authority’s whistleblowing team be recorded.

It came as Antony Townsend, the complaints commissioner, dismissed a complaint against the FCA where someone claimed to have passed on information which was not dealt with appropriately.

The complainant claimed they were then told to “fill your boots” when they suggested they would raise their concerns with Action Fraud.

Mr Townsend said: “Although the FCA was unable to make a conclusive finding on this phone call as it was not recorded, the whistleblowing team offered you an apology for any insensitive language that may have caused offence.

“Based on the evidence I have seen I consider that the complaints team’s response on this element of your complaint was reasonable, although I am surprised that not all phone calls with the whistleblowing team are recorded.

“I suggest that the FCA considers whether it would be appropriate for it to do so.”

In response the FCA said all calls are recorded but this particular call was inbound and made to a member of staff’s direct line – and as such wasn’t recorded.

The FCA also said that although the recording facility exists, many whistleblowers do not wish to be recorded, due to the nature and sensitivity of the calls.

The complainant also made a number of other allegations against the FCA, including that one of the regulator’s supervisors was “intimidating and threatening” in trying to coerce them into agreeing a voluntary requirement.

They also complained that the FCA blackmailed another firm into informing the complainant’s clients they had been invested into a non-standard product.

Another element of the complaint was that during an interview several enforcement staff members were passing notes to one another and continually pointing at things, which the complainant found to be “unnecessary intimidation”.

Mr Townsend dismissed these complaints saying that in relation to the third element, interviews are not video recorded so he has been unable to make conclusive findings on the matter.

He said: “The complaints investigator considered the transcripts of the audio-recordings of the interviews and these have also been supplied to me.

“He also made enquiries of relevant staff who said it was not unusual for team members to pass each other post-it notes or point out relevant information.

“I do not consider that the interview recordings reveal evidence of bullying or intimidation tactics.”

On the blackmail allegation, Mr Townsend said he did not believe the information the complainant provided was of “any evidential value” about what the FCA asked another firm to do.

He also dismissed the first element of the complaint.

The complainant also alleged that the FCA had acted criminally, but Mr Townsend said he did not have the power to investigate this and suggested any criminal issues be taken to the police.

Last week the Financial Conduct Authority revealed the number of people offering tip-offs about wrongdoing to the watchdog declined for the second year in a row, despite the regulator investing in training to improve the way staff handle whisteblowers.

In the 140-page FCA annual report and accounts it was revealed throughout 2016 to 2017 the regulator implemented a new case management system to improve handling of whistleblowing cases, and provide better analytics with outside organisations.

Yet the number of reports it received has continued to fall.

In 2016 to 2017 the FCA managed 900 intelligence cases from whistleblowers and shared information with external bodies, including the National Crime Agency, police forces, HM Revenue & Customs and other UK and overseas regulators, in more than 100 cases.

Of the 900 reports, 119 were red flags raised about financial advisers, around 13 per cent of the total.

In 2015 to 2016, the FCA received 1,014 tip-offs and in 2014 to 2015 the regulator managed 1,340 whistleblowing reports.

The regulator also clarified when an investment adviser must tape conversations with their clients in a 1,068–page paper.

In earlier consultations with the FCA advisers questioned what they must do if a client is initially uncertain as to whether they wish to invest or if they make face-to-face contact or ring on a telephone line that can’t be recorded.

According to the regulator under the final Mifid II rules advisers are required to record conversations that result in a transaction being undertaken or that are intended to result in a transaction being undertaken.

The investment advice is caught insofar as it relates to a specific transaction that the client wishes to undertake, the FCA added.

But if, for example, the adviser imparts advice to the client who says that they need to go away and think about it, the FCA clarified it would not expect this conversation to be required to be recorded for the purposes of the telephone recording regime.

However the watchdog noted there may be other record keeping requirements for this first meeting, for example for suitability report purposes.

damian.fantato@ft.com

Taken from : https://www.ftadviser.com

 

By David Petty

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