The Ƶ's key financial watchdog has come under fire from a group of MPs investigating its efficacy amid the WealthTek and other scandals.
A new report from the All Parliamentary Group (APPG) on Investment Fraud and Fairer Financial Services has accumulated evidence from 175 people who have engaged with the Financial Conduct Authority (FCA), including some of its former employees. The group says the testimonies given point to the FCA being widely seen as incompetent, with a "significant number" of respondents also believing the watchdog has sometimes acted in bad faith.
Government intervention is needed to solve issues of lacking transparency and accountability and a "defective organisational culture, driven from the top", the report suggests. It goes on to say there should now be a debate about whether the FCA should be abolished or reformed.
The findings are the culmination of two-and-a-half years work and are said to be the largest ever report into a single Ƶ financial regulator. Since the call to evidence was launched, several high profile scandals have come to light for which the FCA has received criticism. They include last year's sudden closure of Tyneside-based wealth management firm WealthTek, over serious regulatory concerns - with subsequent investigations leading the FCA itself to suspect “one of the largest frauds perpetrated by an FCA regulated individual at an authorised firm”.
Separately to the APPG's report, there has been public testimony from whistleblower Gary Stockdale, formerly an analyst at WealthTek between 2011 and 2021. He first raised concerns to the FCA in 2021 and has criticised the watchdog's handling of his whistleblowing.
He told BusinessLive: "My issue with FCA is not only the failure to act on the information I provided, but the obfuscation that followed the oversight. I can understand that mistakes happen, but is very important to place the welfare of victims above the reputation of the regulator. I have urged them to show humility and apologise to the victims of the WealthTek scandal. Instead, their welfare has been subordinated."
Bob Blackman MP, co-chairman of APPG on Investment Fraud and Fairer Financial Services, 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; if they weren’t, the FCA’s handling of recent issues such as the Woodford, WealthTek and Philips Trust Corporation scandals would have been satisfactory."
Labour peer Lord Sikka, an outspoken critic of the financial industry, said: “The APPG’s report on the Financial Conduct Authority 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.
"For all these reasons I am proud to stand behind what is a remarkably detailed, forensic and credible body of work. Well done to all involved, particularly those that stepped forward to give evidence, especially the former and existing FCA employees.”
