The FCA is to compensate investors who may have lost money due to failings in the FCA register which allowed a fraudulent firm to trade.

In an unusual step, the regulator has also apologised to people who invested in fraudulent peer-to-peer (P2P) firm Collateral.

Payments of £500 may also be made to hundreds of investors who were led to believe Collateral was regulated.

Collateral offered peer-to-peer style investments and its directors were able to fraudulently change details about the firms’ public entry on the FCA’s interim permission register.

The FCA has received over 300 complaints from investors about its failures when dealing with the firm. These included a failure to maintain the correct information on the register and a failure to alert investors when the regulator became aware of the incorrect information. 

The FCA has upheld these complaints, apologised to complainants, and will make payments of £500 to those who invested in Collateral “in recognition of the contribution to the distress and inconvenience caused by the FCA’s errors.”

Further payments of £150 will also be made for delays in complaints handling.  

The FCA said it was aware that there may be other Collateral investors who have not complained. The regulator has set up a dedicated complaint form for these people to provide their details, and has called on them to do so before 31 March. 

The changes made to the register falsely made it look like the firm held interim permission from the FCA to undertake consumer credit activities when it did not.

Some interim approvals were granted to firms who transferred from the Office of Fair Trade (OFT) to the FCA in 2014 but this did not apply to Collateral.  

The firm applied for full authorisation in March 2016 and the FCA admits that opportunities were missed during this process to identify that the firm did not hold a valid interim permission and that the interim permission register was incorrect.

The regulator also admitted that once it had knowledge of the issues, it “did not act promptly enough” to tell the firm to cease regulated business and to correct the register.  

Following an investigation, the FCA prosecuted the directors, who were sentenced to a total of 8 years in prison for their role in the fraud in July 2023. 

Stephen Braviner Roman, general counsel and executive director of Legal, Risk, Compliance and Corporate Governance, said: “While the fraudulent actions of Mr and Mr Currie were the cause of Collateral investors' losses, we recognise we could have acted faster. For that we apologise.”