An All Party Parliamentary Group (APPG) of UK MPs has criticized the Financial Conduct Authority (FCA), labeling it as ‘incompetent at best, dishonest at worst’ in a report advocating for significant reforms within the financial regulator.
The APPG on Investment Fraud and Fairer Finance has presented its findings to Parliament after gathering evidence from 175 respondents, including whistleblowers, scam victims, and both current and former FCA employees. The Call for Evidence was prompted by extensive criticism of the FCA from various impartial sources, particularly regarding its inadequate handling of notable scandals such as those involving London Capital & Finance, Connaught, Interest Rate Hedging Products, and the British Steel Pension Scheme.
Bob Blackman CBE MP, co-chairman of the APPG, commented: “The FCA’s response to severe criticism regarding its performance was to initiate a Transformation Programme. Unfortunately, the testimony we received indicates that this programme has not been successful.”
Testimonies from current and former employees revealed a “defective culture” within the FCA, where “errors and inaction” were alarmingly frequent. One former employee described experiencing “the worst staff culture I have encountered in nearly 40 years.” Others reported a bullying environment where those who raised difficult questions were marginalized and discriminated against.
APPG member Lord Sikka remarked: “The APPG’s report on the Financial Conduct Authority pulls no punches; and rightly so. It’s an unflinching critique of a regulator that has long appeared unfit for purpose. The FCA is complacent, conflicted, and captured; without a serious overhaul, it will fail to fulfill its responsibilities to protect consumers as mandated by Parliament.”
The APPG has proposed several reforms, including the creation of a supervisory council to evaluate the FCA’s effectiveness, changes in funding, and a complete revamp of the process for appointing the FCA’s leadership team.
In response to the report, the FCA stated: “We strongly reject the characterisation of the organisation. We have learned from historical issues and transformed as an agency to better serve consumers, the market, and the wider economy.”