The Financial Conduct Authority (FCA) operates a "report and investigate" model — anyone can file a complaint, and the FCA is obliged to investigate. This creates a potent weapon for those seeking to inflict reputational damage on financial professionals. A false FCA complaint can trigger a formal investigation, compliance reviews, and — in the worst cases — suspension of regulatory permissions. This guide explains how defamation law protects financial professionals from malicious FCA referrals.
The Weaponisation of FCA Complaints
False FCA complaints typically originate from three sources: disgruntled clients who suffered genuine investment losses (but attribute them to misconduct rather than market risk); competitors seeking to undermine a rival's regulatory standing; and ex-employees with grudges. The FCA's obligation to investigate every complaint means that even wholly unfounded referrals create a formal record.
Qualified Privilege and FCA Complaints
A genuine complaint to the FCA made in good faith is protected by qualified privilege. However, privilege is defeated by malice. Evidence of malice includes: the complainant knowing the allegations were false; the complaint being made after a personal dispute unrelated to financial services; coordination with other attacks (simultaneous negative reviews, social media posts); and the timing of the complaint relative to a commercial dispute.
The Impact on FCA-Regulated Individuals
An FCA investigation — even one that concludes with no action — appears on the individual's regulatory record. Compliance departments at banks, wealth managers, and insurance companies run FCA checks on prospective hires. A historic investigation, even if dismissed, can prevent career progression and new appointments.
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Pursuing Legal Action
A defamation claim against a malicious FCA complainant can proceed alongside the regulatory investigation. Key steps include: preserving all correspondence and evidence of the complainant's motivation; obtaining legal advice on the interaction between defamation and regulatory proceedings; and acting within the one-year limitation period.
Related Reading
Finance defamation hub | Workplace defamation | Falsely accused of fraud at work
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