A group of MPs tasked with holding the Government to account has said that a new report into the Financial Conduct Authority’s (FCA) has shown that it is “widely seen as incompetent”.
The All-Party Parliamentary Group (APPG) for Investment Fraud & Fairer Financial Services released a new report in which it said “there is compelling consensus among respondents that the regulator too often fails to perform its functions to a reasonable standard”.
The APPG report said: “The FCA is widely seen as incompetent.
“This view is particularly strongly held in relation to its consumer protection remit, where criticisms abound that it is slow to spot and identify fraud and other misconduct, its responses to such wrongdoing are slow and inadequate, and it is insufficiently assertive in securing redress for consumers and penalising perpetrators.”
The APPG report follows on from a call for evidence which saw 175 individual written submissions who have been engaging with the FCA other than through the normal course of working in the industry.
To the APPG’s knowledge, this is the first time a qualitative survey of this size has been done in relation to stakeholder experiences and perceptions of a single UK financial regulator.
The MPs have said “here has been a high degree of consistency across the testimony submissions”.
Emily Shepperd, FCA chief operating officer, made a speech yesterday at TheCityUK National Conference, Birmingham, but the regulator has not currently officially commented on this APPG report.
At the conference Shepperd set out the foundations for the future of the FCA’s next five year strategy.
She said: “The FCA wants to enable a fair and thriving financial services market for the good of consumers and the economy.
“To achieve this, a key cornerstone of our strategy will be growing trust. Trust in us as a regulator. Trust between us and those we regulate. And consumer trust in the financial services they rely on.”
Four main themes of the FCA’s approach to future strategy:
- Becoming a more efficient and effective regulator.
- Tackling financial crime.
- Building consumer resilience.
- Supporting economic growth and innovation.
Bob Blackman CBE MP, co-Chairman of the APPG, (pictured) said: “The testimony received suggests that there are very significant shortcomings to the FCA.
“It comes across as an opaque and unaccountable organisation, slow to act and even slower to admit it has got things wrong and to change.
“The individuals who generously shared their experiences with us told tragic tales of regulatory failure causing enormous financial and emotional distress.
“Perhaps some of the most compelling evidence comes from current and former employees of the regulator itself, who depict its culture and leadership as profoundly defective.
“It is vital that the UK has a financial regulator that is fit for purpose, so it became something of a mission for the APPG to gather evidence about the FCA and to propose remedies to problems identified. Ultimately, we hoped our collective endeavour would find insights that could initiate fresh policy thinking and reform.”
FCA integrity called into question
The APPG report said a significant number of respondents believe the FCA sometimes acts in bad faith.
The incendiary and damning report includes views from current and former employees that depict the FCA as having a defective culture, one that has got worse rather than better in recent years.
It describes errors and inaction that have become too common, “where there is little accountability, and those who challenge a top-down ‘official line’ on any given issue are bullied and discriminated against, or even managed out”.
While some allegations are unevidenced, the MPs’ report said there are too many for these to be easily dismissed, “especially since some others are supported by either circumstantial or case-specific evidence”.
The APPG acknowledges that it does not have the means to verify the specific allegations made in the report, and cannot attest to the accuracy of the testimony.
Hwoever, it said: “We consider it important that it is reported as given, as part of what appears to be a consistent pattern of complaints made regarding the dealings of the FCA, with affected individuals.
“This report is not about specific allegations against financial services firms – we do not attempt to analyse individual cases and it follows that we do not pass judgement about what happened beyond simply sharing what the testimony-giver has provided. Rather, this report is about the performance of the FCA based on the lived experience of those who have interacted with it.”
AM has contacted the FCA for comment on the APPG report.
