FSA 'warned over Crown Currency'

FSA 'warned over Crown Currency'

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Collapsed foreign currency firm Crown Currency Exchange was reported at least three times to City regulators, reports said

Collapsed foreign currency firm Crown Currency Exchange was reported at least three times to City regulators before it failed owing more than £16 million, it was reported.

The Financial Services Authority (FSA) received three warnings over the company dating back to 2006, including one from Cheshire Police, according to The Sunday Telegraph.

In correspondence reportedly seen by the newspaper, the FSA is revealed to have decided to drop the complaints either because Crown Currency did not fall within its remit or due to insufficient evidence.

Crown Currency went bust in October, leaving more than 8,000 victims out of pocket – some losing between £100,000 and £400,000 each.

It emerged after the firm went bust that it was not regulated and therefore not covered by FSA compensation schemes – meaning customers cannot recover their cash through the FSA. Two men were arrested and released on bail last week by detectives investigating the collapse of Crown Currency.

The firm did not come under the remit of the FSA as foreign currency exchanges are not automatically regulated.

But Crown was able to register at the FSA and therefore carry the regulator’s logo on its website and marketing literature, despite not being authorised.

FSA chief executive Hector Sants admitted to MPs in a hearing late last month that there was consumer misunderstanding over the difference between registration and authorisation.

He revealed the FSA was now in talks with the Treasury over possible rule changes to tighten supervision of companies such as Crown.

It is also looking at whether to prevent unauthorised firms from publicising the fact they are registered.

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