Britain’s financial regulator has escaped a House Of Commons vote of no confidence, but has come under severe criticism from MPs who accused them of being ‘weak, toothless and anaemic.’
The scathing criticism of the Financial Conduct Authority (FCA) came in a two and a half hour debate sparked by a vote of no confidence motion from back-bench MP, Conservative Guto Bebb. The motion said: “This House believes that the FCA, in its current form, is not fit for purpose and we have no confidence in its existing structure and procedures.”
He was backed by Labour MP John Mann, a member of the Treasury Select Committee, who claimed consumer rights are being ‘ripped away’.
The wide-ranging debate examined the way the FCA has conducted its business since it took over from the Financial Service Authority (FSA) three years ago. In particular, it examined an investigation into the failed Connaught Series 1 fund, interest rate swaps and the mis-selling of PPI.
Mr Mann said: “The FCA ought to be strengthened, but it would appear that it is being weakened. With its culture reviewed, dissipated and destroyed, it is being neutered.
“One can only conclude that the rights of the individual, the rights of the entrepreneur and the rights of the consumer are being subsumed to the Big Brother of the Bank Of England and the Treasury.”
Tory MP Gary Street described the regulator as ‘weak, toothless and anaemic from the very beginning’ of its investigation of the mis-selling of interest rate swaps.
Motion sponsor Guto Bebb also drew the chamber’s attention to the recent FCA decision to drop an investigation into banking culture.
The decision had been branded as ‘shocking’ by Shadow Chancellor John McDonnell and ‘a dangerous and costly mistake.’
The investigation was originally hailed as an important task by the FCA. It was supposed to look at the culture which drove banks at the time of the financial crisis and to make sure that lessons had been learned.
It is widely held that the commission driven culture prevalent within the UK banking system at the time was a major factor in the mis-selling of billions of pounds worth of PPI policies to people who didn’t want them, didn’t need them and – in many cases – didn’t even know they had them.
But the inquiry has been dropped by the watchdog who said it would not help it to achieve its ‘desired outcomes’. Instead it has promised to ‘encourage the delivery of cultural change’ with banks individually.
Out of time
The debate ran out of time before a vote could be taken on the no confidence motion. Treasury minister Harriet Baldwin said: “No-one is denying the FCA has a tough job ahead. That is why it is essential that it is well prepared, well staffed and well equipped to do that job and that it has the best leadership possible.”
Andrew Bailey, current head of the UK’s other regulator – the Prudential Regulation Authority (PRA) – has just been appointed the new chief executive of the FCA and is expected to take up his post in the summer.
Guto Bebb had the last word in the debate, saying: “There is an important message in that point. The FCA does need to reform. Although we all hope that the new chief executive will be a fresh brush within the FCA, he should be aware that he has a lot of work to do to rebuild confidence in the regulator.”