A parliamentary group on fairer finance has reignited its row with the Financial conduct Authority (FCA) today, comparing the watchdog to the Post Office and accusing bosses of engaging with criticism in a “disappointing, defensive and dismissive” way.
In a new report, the All-Party Parliamentary Group on Investment Fraud and Fairer Financial Service, which counts Jeremy Cobyn’s shadow Chancellor, John McDonnell, and the former chair of the Competition and Markets Authority, Lord Tyrie, among its members, said the FCA had been “unconstructive” in responding to a 350-page paper which criticised its operations in November.
“For the record, and the avoidance of any doubt I wish to politely and respectfully state that I am disappointed with the FCA’s response,” Bob Blackman, chair of the group, wrote.
The initial findings, compiled through testimony from 175 whistleblowers, former employees and current staff, painted a scathing picture of the FCA and accused it of failing consumers and forging an overly cosy relationship with the firms it regulates.
Blackman’s group has now also challenged the FCA’s claim that 85 per cent of its stakeholders are satisfied it is protecting consumers, and claimed its behaviour was reminiscent of the Post Office.
“The FCA, like the Post Office, has too many red flags. And like the Post Office the FCA’s lack of objectivity and self denial of the problem only serves to emphasise how critical the need for a resolution is,” Blackman wrote.
The Financial Conduct Authority has hit back at the latest criticism and said it had proposed a meeting with the APPG’s chairs to discuss their concerns, an offer that was not mentioned in the report.
“We recognise there are a range of views in Parliament about our objectives,” a spokesperson for the FCA said.
“We continue to protect consumers while embracing the new secondary growth and competitiveness objective given to us by Parliament. As we set out in our recent letter to the Prime Minister, we welcome a debate and as broad a consensus as possible about the appropriate risk appetite we should work to.”
The report sparked a row when it was published in November but some in the City have cast doubt on the methods used to compile its findings.
“It will not help move the focus of the organisation”
Former City minister, John Glen, quit the cross-party body after the first report’s publication, saying it “fus[ed] the gripes of anonymous embittered current and former employees” and will not “help move the focus of the organisation”.
The group’s criticism underscores the balancing act facing the FCA as it looks to row in behind the government’s growth push whilst also maintaining a primary objective of protecting consumers.
Under the previous Conservative government, the FCA was handed a secondary objective to promote the growth and competitiveness of the firms it regulates.
Rachel Reeves has since renewed the pressure on regulators to put growth at the centre of their plans, writing to 17 watchdogs on Christmas Eve, including the FCA, asking them to set out ideas for growth. She has accused regulators of going “too far” in trying to eliminate risk from the financial system.
However, Nikhil Rathi, the chief of the FCA, has called on government to more clearly define its appetite for failure and slackening consumer protection contested the findings of the report. He said in a podcast last week “while there is important feedback in [the initial report], I don’t think we recognise a lot of the characterisation”.
Following the publication of the APPG’s initial report, the FCA said: “We sympathise with those who have lost out as a result of wrongdoing in financial services, however we strongly reject the characterisation of the organisation.
“We have learned from historic issues and transformed as an organisation so we can deliver for consumers, the market and the wider economy.”