MPs are looking to start a parliamentary debate on how to make sure the FCA is fit purpose.
The call follows investigations into the FCA released last week, showing it failed to properly oversee collapsed mini-bond firm London Capital and Finance, as well as the Connaught Income fund, leading to further losses for investors.
The All Party Parliamentary Group on Personal Banking and Fairer Financial Services was established last week to “identify aspects of personal banking and financial services where the service providers or regulators have not delivered, or are not delivering, excellence and appropriate consumer protection; to facilitate and encourage all stakeholders to work together to resolve past and present shortcomings, and to bring about positive changes”.
Its chairman, Peter Gibson MP, believes that the most worrying problem that the reports showed is a culture at the top of the FCA of “dismissiveness, denial and delay”.
He says that the fact that FCA chief executive Nikhil Rathi recently appointed “one of the individuals responsible for what has happened, Megan Butler [previously FCA director of supervision], to be in charge of transformation shows that the FCA’s senior leadership still does not grasp the nature of the problem.”
He says he will liaise with “all the relevant parliamentary bodies and many parliamentary colleagues” to organise an inquiry which would ensure that “the current crisis in confidence about the FCA’s capability is turned into something positive and truly transformational.”
Gibson adds: “Parliament has given the FCA clear statutory objectives which include protecting consumers from harm.
“It’s all well and good having an apology from the FCA’s current chair, Charles Randell, and the former chief executive, Andrew Bailey, for what the FCA has done, or more accurately for what it has failed to do; but what we actually need is timely and targeted transformation aimed at ensuring we have a conduct regulator that works – it’s obvious to all observers that we don’t yet have that.
“The reports show that there are many serious and interconnected problems that continue to dog the FCA including weak governance, insufficient expertise, ineffective leadership and, perhaps most worrying of all, a culture at the top of dismissiveness, denial and delay.
“The fact that a very recent decision by chief executive Nikhil Rathi to appoint one of the individuals responsible for what has happened, Megan Butler, to be in charge of transformation shows that the FCA’s senior leadership still does not grasp the nature of the problem.
“The situation is very simple – parliamentarians and the public at large expect the FCA to regulate effectively; but there can be no doubt it is failing.
“Back in February 2016, there was an important debate in parliament about the future of the FCA; the question to be debated now is not whether the regulator is unfit for purpose but, rather, what’s it going to take to get the FCA fit for purpose?
“I will be liaising with all the relevant parliamentary bodies and many parliamentary colleagues over the coming weeks to ensure an appropriate inquiry is organised that ensures all stakeholders are spoken to, including the authors of the two reports, those responsible for the FCA’s poor performance and groups representing consumers that have been harmed, to ensure the current crisis in confidence about the FCA’s capability is turned into something positive and truly transformational.
“It is of systemic importance, particularly post-Brexit, that the UK can have confidence in those responsible for regulating our strategically-important financial sector.
“Nothing should be off the table at this point, especially as the reports show that had the FCA acted properly on the intelligence it was given, the LCF, Connaught and even the Woodford scandals need not have happened at all.”
Another APPG member, Kevin Hollinrake MP, adds: “I’ve had many reasons to question the competence of the FCA’s leadership over recent years on a range of matters that have caused great public detriment, particularly to people running businesses.
“The conclusions that Dame Gloster and Raj Parker have expressed in their highly critical reports should be shocking to me.
“Unfortunately however, they are merely in keeping with the conclusions I have come to over a significant period of time – that there is something seriously wrong with the FCA.”
Paul Howell, another MP to have joined the APPG, says: “The FCA should be a foundation of financial integrity and for it to find itself on the wrong end of reports like these undermines public confidence. It is imperative that this is investigated fully and integrity restored”.
