In a hard hitting Parliamentary report, politicians of all parties have described the Financial Conduct Authority (FCA) as having “deep-rooted cultural problems”, with one contributor criticising the regulator for being “complacent, conflicted and captured” and “not fit for purpose”.
The report is due to be published in full on November 26th, which means it coincides with Asset Finance Connect’s autumn conference, which is focused on the impact of regulatory intervention in response to the current turmoil within the sector.
Edward Peck, CEO of Asset Finance Connect said: “Our community has felt the heavy hand of FCA intervention in the auto finance market with far-reaching – and unintended – consequences.
“While the original remit was to ensure market stability, lenders, brokers and consumers are now in position of greater uncertainty than ever around key issues including commission disclosure and gaining customer consent.
“The Asset Finance Connect conference will be examining how the industry responds to the regulator’s failure to grasp how the auto finance works, and the FCA’s inability to provide clear guidance on the rules to follow. But there is no doubt our members are disillusioned and disappointed with the regulator’s approach.”
APPG report
The FCA study is the work of the All-Party Parliamentary Group (APPG) on Investment Fraud and Fairer Financial Services, which heard evidence from more than 170 individuals including past and present FCA employees.
APPG co-chair Bob Blackman, Conservative MP for Harrow East, said: “The FCA responded to the excoriating criticism it received about its poor performance by launching a Transformation Programme. Unfortunately, the testimony received by the APPG in response to its Call for Evidence indicates that this programme has been a failure.
“The FCA’s deep-rooted cultural problems, described so forensically by the series of external reports, are still there.”
The report’s key findings are:
- The FCA is widely seen as incompetent
- 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 organisational culture, driven from the top
- Transparency and accountability is lacking
Call for intervention
The report’s main recommendations include consideration of whether there should be now government intervention; whether the regulator should be abolished or reformed; and the creation of a Financial Regulators’ Supervisory Council, which would conduct periodic reviews of the operational effectiveness of the FCA
Other options laid out in the APPG study include:
- Stripping out the fundamental conflicts of interest within the FCA’s objectives
- Introduction of a statutory, civilly actionable Duty of Care
- Giving the FCA’s Financial Services Consumer Panel a statutory remit and introducing Parliamentary oversight of the appointment of its chair
- Changing how the FCA is funded
- Overhauling how the FCA’s senior leadership team is appointed
- Replacing the FCA’s Leadership Team; if it proves necessary
- Carrying out a Royal Commission for radical architectural reform of the regulatory landscape
APPG member Lord Prem Sikka, Professor of Accounting at the University of Sheffield, commented: “The APPG’s report on the FCA pulls no punches; and rightly so.
“It’s a justifiably hard-hitting critique of the regulator; a regulator that I have been convinced for quite some time to not be fit for purpose.
“The FCA is complacent, conflicted and captured; and without a major overhaul it will never deliver on the responsibilities Parliament has given it to protect consumers.”
Bambos Charalambous, Labour MP for Enfield and Southgate, a fellow member of the APPG, said: “One thing is certain- it is vital that such an important sector for the UK economy as our financial industry is regulated by an organisation that we can all have trust and confidence in; and it’s clear we’re a long way away from that at the moment.”
For more details and to reserve your place visit the AFC conference website or email Louise Clavey at louiseclavey@assetfinanceconnect.com