The FCA also noted that it cannot take responsibility for harm caused by firms before it becomes responsible for regulating them.
The FCA has said it will not pay compensation to those who have lost money due to the failure of funeral plan provider Safe Hands in 2022.
The regulator gained responsibility to regulate the funeral plans sector from July 2022 and began to receive applications from firms wishing to offer funeral plans from September 2021.
The Complaints Commissioner said yesterday that the FCA should consider paying compensation to those who lost money because of Safe Hands failure.
However the FCA has rejected this request.
The Commissioner upheld a complaint that the FCA failed to adequately monitor the regulatory perimeter in this area and whether Safe Hands was acting outside the scope of an exemption from the need to be authorised.
According to the complaint, the FCA received information from anonymous sources about the company, including allegations of fraud, but the regulator chose not to act until Safe Hands made an application to become authorised in October 2021.
In February 2022 the regulator informed Safe Hands that it was unlikely to authorise the firm, leading to the provider entering administration on 23 March 2022.
The regulator acknowledged that it did receive anonymous information about Safe Hands in April 2021, that the firm may be carrying out regulated activity without necessary permissions but added that it was impossible to immediately act on all intelligence, with over 34,000 tip-offs being received that year.
The FCA said in a statement: “We must decide how to prioritise our resources to protect consumers from suspected wrongdoing and in 2021 we focused our efforts on the complex process of bringing a whole new sector – funeral providers – within our remit.
“Whenever we act, we also need to consider the best route to seek information to avoid a worse outcome, for example if an unregulated firm is tipped off, potentially making protecting assets harder.
“We believe the steps we took were reasonable and proportionate based on the information we received. There is no evidence that alternative action from us would have led to different outcomes for Safe Hands customers.”
In its response to the Complaints Commissioner, the FCA also noted that it could not take responsibility for harm caused by firms before it became responsible for regulating them.
There is an ongoing investigation into Safe Hands by the Serious Fraud Office.
