The Financial Services Authority has told FTAdviser [http://www.ftadviser.com/2013/03/19/regulation/regulators/fsa-refuses-to-take-action-against-aggressive-employee-e91lvCey2FYnDf15hAB7eN/article.html] it has not taken – and will not be taking – disciplinary action against an employee who threatened staff at a firm with jail, despite the behaviour being found to be “unprofessional” and “aggressive” by the Complaints Commissioner.
Last week the FSA publicly apologised for the conduct of several employees when Complaints Commissioner Sir Anthony Holland upheld five complaints from a regulated company following an “ambush” meeting with the regulator.
The meeting was ostensibly organised to discuss general requirements of companies submitting suspicious transaction reports, but in reality the FSA was considering action against the firm and wanted to quiz employees about why it hadn’t submitted a specific report.
One FSA employee, referred to as ‘person B’ and understood to be a technical specialist dealing with STR submissions, repeatedly asked why the company had not submitted the STR and at one point said “we have put people in jail for less”.
Failure to submit such a report is not, itself, a criminal act.
That company, revealed later to be oil investment broker PVM Oil Futures, brought the case to the Complaints Commissioner after an internal investigation by the FSA did not uphold any of the complaints.
In fact, the internal investigation instead alleged inappropriate behaviour from PVM’s lawyer, Sara George, a partner at Stephenson Harwood and previously a prosecutor in the FSA’s enforcement division from 2002 to 2006.
Ms George said in a statement: “The FSA initially exonerated itself in its own internal investigation without apparently having reviewed even its own internal email correspondence.
“This must inevitably undermine public confidence in the reliability of its complaints handling process.
Its unwillingness to scrutinise its own actions combined with the ease with which it proceeded to make allegations of professional misconduct against me for questioning its powers is astonishing.”
Despite having all five complaints upheld by Sir Anthony and itself issuing a public apology, a spokesperson for the regulator confirmed to FTAdviser that there would be no steps taken to discipline person B because his actions did not contravene the FSA employee handbook.
Robin Bieber, managing director of PVM Oil Futures Limited, said in a statement: “The management team of PVM is distressed and disappointed by the values and attitudes demonstrated by the FSA’s internal correspondence and the FSA’s conduct towards us.
“We were clearly the subject of bullying and unethical behaviour by a regulator, the full extent of which was only made clear after our prompting the CC to revisit certain issues after his initial investigation.”
Read the full FSA apology here.http://www.fsa.gov.uk/static/pubs/complaints/gel-01481.pdf
Statement re Complaint
The Complaints Commissioner has published his findings into a Stage 2 complaint against the FSA about a meeting with a regulated firm.
The Commissioner upheld this complaint against the FSA and made a number of recommendations.
The FSA accepts the recommendations of the Commissioner and has already addressed the recommendation that we should apologise to the complainants.
The FCA Board will take forward the Commissioner’s other recommendation that regular regard is paid towards paragraph 17; 2.14; 3.11; 4.11 and 4.20 of the 14th Report by the Committee on Standards in Public Life.
The FSA recognises the important role played by the Commissioner in ensuring the accountability of the FSA.
It is part of the FSA’s role as regulator to examine the conduct of regulated firms when it has legitimate reasons for doing so. In this case, however, mistaken judgements made before the visit to the firm were compounded by poor handling by our staff of a difficult situation.
This should not have happened and is not representative of the behaviour we expect to adhere to in our dealings with regulated firms.
The FSA strives to be an open and transparent regulator, holding itself to the highest standards expected from those firms it regulates. We recognise the significant powers we have and the responsibilities they bring with them. We want to ensure that we exercise those in a fair, proportionate and professional way. Where we fall short of that, however, we will learn from our mistakes and change how we work.
On this occasion we fell short of the standards we set ourselves, which we regret. We have apologised to the complainants for this, will communicate the importance of the Commissioner’s findings to all staff, and will incorporate lessons learned into our training programmes.
As part of our open and transparent approach, we would usually explain the purpose of meetings to firms in advance and would explain why we have requested specific documents or information. However, there will be exceptions where advance disclosure is either not practical or could prevent us from achieving our objectives. We also believe it is appropriate for our staff to ask unscripted questions or raise new issues that arise during the course of meetings.
Identifying circumstances where advance disclosure is not appropriate is a matter of judgement. We accept the facts of the case as laid out in the Commissioner’s Final Decision and we accept the Commissioner’s conclusion that the FSA “was not sufficiently open with the complainants”.
However, whilst we believe that the decision to not disclose the dual purpose of the meeting was a mistaken judgement in this case, we do not believe the judgement was the result of a lack of integrity.
http://www.ftadviser.com/2013/03/19/regulation/regulators/fsa-refuses-to-take-action-against-aggressive-employee-e91lvCey2FYnDf15hAB7eN/article.html
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