FCA under pressure from MP to face allegations of consumer negligence | So Good News
Currently the FCA has no protection against such damaging criminal activity. But three MPs have decided to amend the Financial Services and Markets Act to change this, the Times said.
Users who claim to have lost money due to the controller’s failure to prevent illegal activity, will be able to file a legal claim for their losses against the controller, under the change.
The amendment, which has been brought forward by MPs from the Scottish National Party, will be debated this evening.
If the change is completed, questions about how the damages will be paid must be answered – currently the FCA receives money from the companies it regulates.
Under the amendment, the consumer’s loss must be “material”, it is caused by prohibited activities, and the activities must fall under the exclusion of the authorities.
In order to bring a successful claim against the FCA the consumer will have to prove to the court that the regulator “recklessly failed to take steps to prevent illegal activity or activities taking place where it knew, or was expected to know, that illegal activities or activities were taking place”.
There have been increasing calls for the regulator to be involved in civil lawsuits where it can allege negligence, following business losses.
At the London Capital and Finance Forum from 2019, the FCA was criticized for failing to prevent more than 11,000 bondholders from losing more than £200m.
The FCA’s immunity from development regulations dates back to 20 years ago.
At the moment consumers can only bring review cases and lawsuits to question the decisions of the regulators. The FCA can also be taken to the bankruptcy court.