We all make mistakes, but what happens when the mistakes are made by the Financial Conduct Authority (FCA) and put businesses at risk or cause them to suffer financial loss. Under these circumstances, it may be difficult to forgive. Addleshaw Goddard’s Chris Brennan looks at the options.


Since April 2014 the FCA has been responsible for the regulation of consumer credit firms. This includes the scrutiny of applications for full authorisation as well as day-to-day supervisory responsibilities.

The FCA is a different body from its predecessor, the OFT, and has shown a willingness to exclude some businesses from the market. It has also sought to impose significant changes in terms of conduct and customer outcomes.

While the FCA will usually wield its powers in an appropriate manner, there will occasionally be circumstances where a firm feels unfairly prejudiced by an FCA decision – sometimes justifiably. What can firms do in such a situation? 

FCA appeal process

Any significant decision by the FCA is likely to be subject to a statutory process with an option to challenge or appeal. For example, a decision to refuse authorisation can be challenged before the internal appeal body – the Regulatory Decisions Committee. Firms which remain unhappy with the outcome can further challenge the decision before the Financial Services and Markets Tribunal.

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However, not all decisions can be challenged in this way.

Many supervisory decisions, such as the requirement to appoint a skilled person, are not subject to any form of appeal. So what can a firm do when it feels that a wrong decision by the FCA has caused its business to suffer some financial loss?

The Complaints Commissioner

To the extent a firm is unhappy with a decision made by the FCA in the exercise of its regulatory function, it may, in some circumstances, challenge this decision via the complaints scheme.

The scheme will not consider all complaints; unreasonable conduct, unprofessional conduct or other types of misconduct must be alleged.

The scheme will not concern itself with complaints that raise dissatisfaction with the FCA’s legislative function, or if the FCA’s decision would be better considered in another forum. Therefore, the scheme is not an option if a firm is dissatisfied with FCA rules, general policy or the outcome of an investigation.

The scheme follows a two-stage process whereby complaints are considered firstly by the FCA itself. To the extent the FCA considers the complaint a valid one, it may issue an apology, rectify any error made or, if it can be shown that the complainant has suffered a quantifiable loss that was caused by the FCA’s act or omission, make a compensatory payment. Any compensatory payment would be made on an ex gratia basis and without any admission of liability.

If a complainant is dissatisfied by the outcome of the FCA’s review, it may ask the independent Complaints Commissioner to consider the complaint. The Complaints Commissioner can consider the complaint and make a determination that is contrary to that made by the FCA. However, that determination is not binding against the FCA and therefore any recommendation by the Complaints Commissioner can effectively be ignored. Indeed, there have been cases where the FCA has simply refused to pay attention to recommendations made by the Complaints Commissioner.

Misfeasance in public office

The FCA cannot be held liable in damages for any act or omission in the discharge of its public function – it has statutory immunity against such claims. However there is an exception where it can be shown that such acts or omissions were undertaken in bad faith.

To be successful in bringing a claim for misfeasance in public office, a claimant would have to show, among other things, that the FCA acted in bad faith either with the intention of causing harm to the claimant, or the FCA was aware of the risk of injury to the claimant by their action or inaction, without an honest belief that the conduct was lawful. The claimant must also prove that it suffered harm as a result of the unlawful action.

Successfully bringing a claim for misfeasance in public office is extremely difficult. Evidencing that an act was motivated by bad faith, as opposed to simple incompetence, is the main challenge. Courts are more inclined to assume that a bad decision was an honest mistake. In the absence of some compelling evidence of bad faith, such claims are likely to fail.

Judicial review of the decision

While often thought of as the option of last resort, decisions of public authorities, such as the FCA, can be considered by the UK Courts, which will test the decision to ensure that it is lawful and fair.

Anyone with sufficient interest may make a claim, which may be brought on a number of grounds:

Where the FCA misdirects itself in law, exercises its power wrongly or acts beyond its powers

Where the decision reached by the FCA can be shown to be so unreasonable that no reasonable authority would have reached that decision

Where the FCA has not properly observed its statutory procedures in reaching its decision

Where due to its own statements and procedures, the FCA is required to act in a particular way and there is a legitimate expectation that it would act in this way.

Judicial review can also be a difficult, expensive and uncertain means of challenging a regulatory decision.

However, if successful, a claimant may obtain an order that could require the FCA to set aside its decision, to act in accordance with its legal duties, and/or prevent the FCA from acting beyond its powers.

In some limited circumstances other remedies, including damages, may be available.