The FCA disagrees with the recommendation for ex-gratia compensation for distress, inconvenience, and consequential loss, maintaining that an apology and a payment for complaint handling delays are more appropriate. The regulator argues that the direct cause of customer losses was the actions of PFX and its director, and it questions the feasibility and appropriateness of determining compensatory payments based on the timing and amount of deposits made after 2017.

The UK Financial Conduct Authority (FCA) has issued a response to the Complaints Commissioner’s Final Report concerning the collapse of Premier FX Limited in 2018.

The FCA acknowledges the concerns raised by the Commissioner and accepts many of the recommendations, but it has decided against paying additional compensation to Premier FX’s customers.

FCA invested over 12,000 hours in enforcement investigations

The FCA notes that the primary cause of Premier FX’s collapse was the decisions made by the firm and its sole director. The FCA invested over 12,000 hours in enforcement investigations, leading to 167 customers with accepted claims being fully reimbursed.

Although admitting that its regulation of Premier FX could have been better, the FCA asserts that it is not clear whether a different approach would have prevented the losses.

The FCA reiterates its apology to those affected by Premier FX’s failure and highlights its commitment to learning from this incident, including adopting a more assertive approach to the authorization and supervision of payment firms.

Additionally, the FCA plans to inform complainants about the steps taken to strengthen its regulatory processes and improvements made to its Register.

FCA rejects ex-gratia compensation for distress, inconvenience, and consequential loss

In the detailed response, the FCA acknowledges the distress caused to PFX customers by its collapse, and while the FCA accepts responsibility for certain regulatory shortcomings, it emphasizes the thoroughness of its investigation and enforcement actions, which ensured all affected customers were fully reimbursed.

The FCA addresses specific recommendations from the Commissioner regarding the Financial Services Register, choosing not to hyperlink terms from the FCA’s Handbook Glossary to the Register due to concerns about overwhelming consumers with technical information. However, it accepts other recommendations and commits to updating the Register to assist consumers better. The FCA also discusses its approach to directing complainants to the Financial Ombudsman Service and the Financial Services Compensation Scheme (FSCS) for clarity on firm protections.

Regarding the FCA’s authorization and supervision of PFX, the FCA agrees to write to complainants explaining the steps taken to strengthen these processes. However, it disagrees with the Commissioner’s recommendation for ex-gratia compensation for distress, inconvenience, and consequential loss, maintaining that an apology and a payment for complaint handling delays are more appropriate. The FCA argues that the direct cause of customer losses was the actions of PFX and its director, and it questions the feasibility and appropriateness of determining compensatory payments based on the timing and amount of deposits made after 2017.

The FCA refutes additional findings by the Commissioner regarding compensation, reiterating its position that it has appropriately addressed the issue and does not accept the recommendation for additional payments. The response highlights the FCA’s case-by-case assessment of individual complaints, its statutory immunity against damages, and the complexity of intervening in PFX’s operations. The FCA concludes that its response, including an apology and payment for complaint handling delays, aligns with its duties and responsibilities under the Complaints Scheme.