On Nov. 26, UKP APPGIFFS issued report on FCA deep-rooted issues.
The UKP All-Party Parliamentary Group on Investment Fraud and Fairer Financial Services (APPGIFFS) issued a report following call for evidence about the UK FCA.
Finds that FCA has very significant shortcomings, is an opaque and unaccountable organization, slow to act and even slower to admit it has got things wrong and change.
Call for evidence uncovered regulatory failure causing enormous financial and emotional distress, evidence from FCA employees depict it as profoundly defective.
Background
Call for evidence initiated in wake of series of external reviews and inquiries in which FCA was heavily criticized e.g. London Capital & Finance plc, interest rate hedging products, the British Steel Pension Scheme, and protecting pension savers from scams.
The APPGIFFS call for evidence aimed to improve the group's understanding of how the FCA is perceived, carried out through several question sets relating to stakeholders.
With sets for victims of: alleged pension and investment scams; bank misconduct towards small to medium enterprises; financial services misconduct from payment institutions and other non-investment scams; mortgage prisoners; whistleblowers.
Other stakeholders; and one for current and former employees of the FCA.
Group wanted to explore whether shortcomings identified by standalone investigations might share underlying causes that had not yet been fully recognized, and whether there were views held by relevant stakeholders not reflected in the public debate.
Key Findings
The report summarizes and analyzes the testimonies of 175 individuals, overall it finds that the FCA is widely seen as incompetent and its integrity is called into question.
A significant number of respondents believe the FCA sometimes acts in bad faith.
Its treatment of whistleblowers and their evidence is alarming; there is a defective organizational culture, driven from the top; transparency, accountability are lacking.
And APPGIFFS considers that the FCA Transformation Program has not worked.
Recommendations
Group's main recommendations are that consideration should be given to: the need for government intervention; debating whether FCA should be abolished or reformed.
The development of a specialist consumer-facing department for scam victims; and establishment of a Financial Regulators' Supervisory Council which would be tasked to conduct periodic reviews of the operational effectiveness of the FCA.
Removal of FCA's immunity from civil liability to consumers; putting in place restrictions on whether/when regulators join regulated firms, vice versa; stripping out fundamental conflicts of interest within FCA's objectives; statutory FCA Duty of Care.
Giving FCA's Financial Services Consumer Panel a statutory remit and introducing Parliamentary oversight of appointment of its Chair; changing how the FCA is funded.
Overhauling how the FCA's senior leadership team is appointed; replacing the FCA leadership team if necessary; and carrying out a Royal Commission for radical architectural reform of the regulatory landscape, if all else has failed.
Next Steps
APPGIFFS believes that the testimony received clearly demonstrates that the FCA is not performing as it should and that it does not enjoy stakeholder confidence.
It urges both the FCA leadership and UK GVT to implement its recommendations with alacrity and vigor, should this not happen further regulatory failure is likely to occur.
Window of opportunity exists now to prevent that, requires prompt and decisive action.
