The APPG report into the FCA lacks balance
The FCA was branded “incompetent at best, dishonest at worst” today - in a new 350-page scathing report published by the All Party Parliamentary Group on investment fraud and fairer financial services.
At first glance, it looks like a very serious piece of work. It includes pages of testimony from politicians, consumers, industry ?– as well as both current and former employees of the FCA.
But more detailed reading of the evidence does not necessarily lead you to the shrill soundbites that have made it into the headlines today.?
Consumers who have lost money are of course angry with the regulator – and understandably so. But regulation cannot stop all losses and harms. And while retrospective analysis will often reveal that chances were missed to spot brewing problems – it’s harsh to make the leap that this amounted to blind incompetence. Everyone I know who works in the regulator does so because of a desire to help consumers and create a safe market. It’s right that every failure should be investigated – but it is unhelpful to indulge in finger-pointing and name calling.
Others list frustrations at not getting straight answers from the FCA – and I would certainly put myself in that boat. But I also understand why the regulator has to be guarded in which questions it answers and which it doesn’t. One need only look at the reaction to FCA plans to name and shame firms that it is investigating – to understand how sensitive firms are about being mentioned by the regulator. If the FCA gave a straight response to every FOI or question it received, it could prejudice enforcement and undermine its ability to do its job. There’s a balance to be struck – and it may not be right. But it is a leap to say that this amounts to dishonesty.
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While the report talks a lot about being “evidence-based”, it is mostly made up of testimonies from people with an axe to grind. It is no surprise to me that there are hundreds of individuals who are unhappy with the regulator. Regulation is hard – and can never be perfect. But the fact that many people are unhappy with it does not amount to evidence that it is incompetent or dishonest.
The report admits that it has mainly focused on the negatives in the testimonies. And there is no attempt to provide balance by presenting the other side of the argument. It is what, in the world of journalism, is known as a hatchet job.
What’s surprising to me is that my first assumption was that the conclusions in this report would drive towards some kind of deregulatory agenda.? But in fact, the recommendations mostly call for a beefing up of FCA independence and integrity. I don’t disagree with some of them. But they are undermined by the tone of the rest of the report.
I know at least two people who were involved and withdrew their involvement – but I am surprised by some of the people who have kept their name on this piece of work, as they are individuals that I respect.
Can the FCA be and do better? Definitely. Does this kind of report help move things forward? Not in my view.
Financial Services Consultant
3 个月I think the report does what many, including the FCA, fail to do: The report is a valuable exercise as it actually listened to the victims of misconduct, whistleblowers and others who have tried to report issues to the FCA. It was a public call for evidence so everyone was welcome to submit their views. Having written one of these types of reports into the culture of the FCA myself, I know what a large undertaking it was: https://newcityagenda.co.uk/wp-content/uploads/2016/10/NCA-Cultural_Change_in_regulators_report.pdf Many of our recommendations from 2016 were not implemented. The FCA didn’t use its new powers to name misleading adverts (which certainly made LC&F a much bigger scandal than it should have been) and didn’t set up an Independent Evaluation Office. There were also no changes to Section 348 of FSMA. More still needs to be done to understand why the FCA can be slow to take action, despite having as you say, many people who work there who desire to help consumers. I don’t even think the organisation itself understands whether it is to do with processes, failure to identify harm, inadequate research, failing to learn from experience, decision-making or pressure from stakeholders.
Skilled in taxation, financial services, public law, drafting of legislation and Parliamentary procedure.
3 个月Well said James
Transparency Task Force
Managing Director of Investment and Property Development Companies and adviser
3 个月The maxim is that a regulator should make a harsh example of a few to deter the many. Top mgt teams surpressing and attacking news they dont like to hear is the wrong way - not just ethically but long term financially. Across the country are once heavy bank borrowers who will not go near the banks or expose themselves to the fraudulent terrors unleashed when two major banks breach 250 years of trust and abuse their trusting customers then manipulate MPs, bank ceo appointments, ex accountants appointments to avoid responsibility. GRG RBS coverup trashed an old trusted brand name. Then HBos reading, Post Office and sort of scam protection comes from higher up placements. The national interest is not served by pandering to bankers who are an intermediary and can barely contribute to GDP as they produce nothing in the opinion of some economists. The failure of the FCA, Bank of England, Brown, auditors, allowed the fear, bankruptcy of the uks most entrepreneurial familys and friends who grew real businesses instead of hacking, humiliating others for corporate psychopathic kicks. Fred Goodwin, Steve Marshall as examples. A trashed real economy vs usa - banks extorting interest on current accounts that should all be 3% higher ..
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3 个月Great perspective