Financial Conduct Authority: Powers
The question
To ask the Chancellor of the Exchequer, what recent assessment she has made of the adequacy of the Financial Conduct Authority’s powers to sanction regulated firms that fail to comply with decisions of the Financial Ombudsman Service.
Answered by Lucy Rigby
Businesses that are regulated by the Financial Conduct Authority (FCA) are required by its rules to co-operate with the Financial Ombudsman Service (FOS), including by complying with any determination that it may make, if that determination is accepted by the complainant. If a regulated firm fails to comply with a FOS determination, the FOS may refer the firm to the FCA. This may result in the FCA taking further action against firms who fail to comply with the FCA’s rules.
The Financial Services and Markets Act 2000 provides the FCA with a range of powers to ensure relevant firms comply with its rules, and to act where firms fail to comply. The government is content that this legislative framework is appropriate and that the FCA has the right tools available to enable it to take action when firms do not comply with regulations.
The FOS does not have powers to directly enforce its determinations through legal proceedings, as its role is to act as an alternative to the courts. However, once the FOS’s determination is accepted by the complainant, it becomes binding on the firm. If a firm fails to comply with a determination, a complainant can enforce it through the courts. This does not require the merits of the case to be considered again by the court.
In cases where a firm fails to comply with a decision due to it failing, affected complainants may be eligible to claim compensation through the Financial Services Compensation Scheme (FSCS).
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