The Final Notice issued against Carphone Warehouse today makes pretty grim reading in terms of the failures in systems and controls at Carphone Warehouse over the relevant period.
We do not of course know all the details of this case but it highlights an issue that we often come across and are asked to advise upon. If a firm becomes aware of extensive mis-selling and makes changes going forward, should they pro-actively notify the FCA?
In this case it appears that the FCA only became aware due to a whistleblower. If Carphone Warehouse were aware of the extent of the mis-selling then it would have had a duty to notify the FCA under Principle 11 (and at which point the sensible thing to do is tell the FCA what steps you intend to take to rectify the situation and provide redress to consumers). Why this didn't happen we don't know and what we also don't know is whether the level of sanction imposed by the FCA would have been reduced by self-notification and whether the FCA have increased the level of sanction because Carphone Warehouse tried to keep their heads down.
This is always a difficult balance to strike and a reminder that authorised firms have onerous duties to "do the right thing" which can have serious consequences if breached.