A debt collection agency hired by the FSA to collect unpaid fees has been criticised by the Complaints Commissioner for “hectoring” an advisory business.

The unnamed recovery firm’s actions did “not reflect well” on the regulator, Sir Anthony Holland concludes.

It followed a dispute over unpaid fees for the 2009/10 financial year. The advisory business claimed it should not be required to pay the full year’s fees because it ceased trading just six weeks into the period.

The matter was referred to the Office of the Complaints Commissioner, which concluded the FSA’s fee rules were fair.

Currently, the FSA says it will not refund periodic fees if a regulated firm ceases to trade within the relevant financial year.

As a result of the “limited income” of the principal of the closed business, the FSA agreed the outstanding balance could be paid in instalments, but the dispute took a fresh twist following a recorded telephone conversation between the principal and a debt recovery agent employed by the regulator.

The 10-minute call was “badly handled” by the debt collector, Holland concludes. He says, while it “did not represent harassment”, the company should not have allowed the conversation to develop in the way it did.

Although the advisory business later resolved to have the matter settled in court, Holland says the debt collector “seemed disinclined to accept” this. “The result was a somewhat hectoring approach with continual interruptions and which I consider does not reflect well on the FSA,” the Commissioner’s statement reads.

Last month, the Office of the Complaints Commissioner criticised the FSA over the way its staff carry out property searches.

It concluded there were gaps in the training of FSA enforcement staff involved in searching premises.

According to the Commissioner’s annual report, the regulator had been left open to complaints on human rights grounds because police officers were not always present while property was being searched.