Complaints Commissioner criticises FCA over Premier FX failure

The Complaints Commissioner has published its report on complaints from people affected by the 2018 collapse of Premier FX Limited. The payments firm had failed when, following the death of its sole director, it transpired that he had made many untrue statements to customers resulting in them paying significant funds to the firm, which were not protected. The review resulted from complaints from a group of consumers who were affected by the failure.

The complainants alleged, variously:

• the that FCA Register is not fit for purpose – in particular, it gives no explanation of what “money remittance” is (FCA said the Register was adequate);
• that the Register contained false and misleading information in stating that “it cannot be determined if FSCS cover would apply to this firm”, when FCA knew that PSPs were not covered (the Register told consumers to contact the firm for confirmation – and, in this case the firm wrongly told customers it was covered)(FCA said this was not misleading and was in line with its practice at the time);
• that FCA did not conduct a robust re-authorisation process on the firm in 2018, in particular not asking key questions that it should have done (FCA agreed its failings here);
• that FCA did not identify that the firm’s online documents contained materially false information (FCA said it was carrying out only reactive supervision on the firm and so would act only on information received – which was limited);
• that FCA did not properly supervise the firm, especially after it had set up its 2017 task force to address known risks with FX companies and would have received significant adverse information about the firm (overall, FCA upheld this part of the complaint although it disagreed with several parts of the allegations); and
• that FCA failed properly to supervise Barclays, which failed to identify irregularities in money flows (FCA did not uphold this).

The Commissioner found that:

• the Register could, and should, have been more helpful.  It is not reasonable (nor does the Register suggest) that consumers should read the FCA Handbook to establish what firms do. Although it was not misleading, it was nevertheless inadequate and potentially unfit for purpose;
• broadly, the Commissioner saw many elements of FCA’s overall approach to authorisation and supervision of the firm which highlighted supervisory failings on its part;
• the actions FCA took following the firm’s collapse were not unreasonable;
• FCA’s failings were a significant contributory factor to the detriment consumers ultimately suffered. While FCA did not act in bad faith, the delay in consumers’ receiving their funds back begs the question of whether FCA should make an ex gratia payment. The Commissioner recommended that it did make such a payment.

FCA has accepted many of the recommendations and acknowledged there are things it could have done better, but maintains that it should not pay any more in compensation to the firm’s customers than it has already made for delays in its handling of complaints. It is adamant that the decisions of the firm’s director were the direct cause of its collapse, and that FCA’s actions had ensured complete returns of funds for 167 customers. FCA had also taken action against Barclays, the firm’s banker, finding that it had not acted with due skill, care and diligence in monitoring the firm, and as a result Barclays had agreed to pay out over £10m to affected customers – this amount being the difference between what the liquidator had distributed and accepted claims.

The Complaints Commissioner’s set of FAQs notes that it can do no more, given it cannot force FCA to make any ex gratia payment, and that any complainant wanting to challenge its decision has the option of judicial review.