The Financial Conduct Authority (FCA) has been heavily criticised by the complaints watchdog for making “serious errors” over its handling of an investigation into the rigging of the Libor benchmark rate.
Two former UBS traders, Panagiotis Koutsogiannis and Arif Hussein, wrote separately to the Complaints Commissioner in May and June complaining the City regulator had failed to disclose issues which potentially undermined the case.
The Complaints Commissioner, Antony Townsend, wrote to lawyers for the two former bankers in letters published today saying the FCA had made “considerable” failings.
The FCA made “serious errors” in its conclusions around limitation periods for the cases, Townsend wrote, although he added that because he had not found evidence of “bad faith” in the regulator’s actions, the complainants were not entitled to damages.
The complaints revolved around time limits on FCA investigations begun in 2012 into allegations of manipulation of Libor (the London Interbank Offered Rate) by banks.
The FCA’s predecessor, the Financial Services Authority, previously had a maximum time of three years – since extended to five – after finding out about an issue to launch proceedings. The FCA made an error in its handling of earlier evidence provided by US regulators which may have triggered the limitation periods.
In 2015 the FCA’s internal regulatory decisions committee dismissed the case against Koutsogiannis, who had been a senior banker at UBS, after coming to the conclusion the case against him was not strong enough.
Read more: The Libor trials: Where we are now
Hussein, a former rates trader in London with the bank, was banned from financial services by the FCA as not a “fit and proper person” in January 2016, a decision which he is challenging.
In a statement today, Koutsogiannis said: “I am shocked and very disappointed by the conduct of the FCA and am considering what other legal remedies I may have.”
Arif Hussein said: “I welcome the Complaints Commissioner's conclusions that have been published today. They constitute a damning indictment of the FCA investigation team's handling of my case, finding that the proceedings against me were not managed competently and fairly and that "serious errors“ blighted consideration of the crucial issue of limitation.”
The FCA today said it has already made improvements to its procedures in a statement, and added it will look into making further changes after today’s decisions.
The statement said: “The FCA accepts the Commissioner’s recommendations and his finding that mistakes were made, for which we have apologised to the complainant.
“We welcome the Commissioner’s conclusion that the evidence shows no bad faith on the part of the FCA.”