A report by a group of MPs said that the UK’s City watchdog is “incompetent”, after evidence from former and current employees was made public.
The Financial Conduct Authority (FCA) oversees banks and other finance companies in Britain and has been the subject of much criticism from witnesses’ testimony compiled by the all-party parliamentary group of MPs on investment fraud and fairer financial services.
The FCA has been subject to increased scrutiny after a number of high-profile incidents, including the collapse of a number of controversial investments – which critics branded as scams and say the FCA should have spotted – and a whistleblower scandal.
It was founded after the financial crisis when its predecessor, the disbanded Financial Services Authority, was seen as too weak. It is now facing accusations that it is also too close to the companies it is meant to regulate.
The report, compiled by a group of 30 MPs and 14 peers drew on 175 testimonials and concludes that “the picture painted is not pretty”.
According to the testimony, one employee of the watchdog said: “The FCA is an unprofessional and incompetent organisation – the culture is simply that you are expected not to deviate from the message, that ExCo [executive committee] and the FCA as a whole are apparently doing ‘excellently’.”
They also said the culture was “toxic”, risk-averse and founded on “self-interest and self-protection”.
A separate, former FCA worker criticised the company’s treatment of whistleblowers. They said that a whistleblower had their home visited on 20 minutes’ notice to ”confiscate their work laptop and carry out search activities on all of the whistleblower’s personal IT devices”.
They said: “This visitation attempt was aggressive, and completely unexpected and unsolicited”.
The MPs also heard from Ian Davis, who tragically took his own life after losing £618,600 after investing in what turned out to be a scam.
He invested in London Capital & Finance Plc, which was described as a Ponzi scheme by the High Court last week after its £237m collapse.
A Ponzi scheme gathers investors’ money and uses new investment cash to pay existing savers to imitate high returns. But schemes of this nature need an infinite supply of new money to continue, and as new money dries up, they are unable to pay returns and collapse.
Mr Davis said at the time: “I have asked the FCA what due diligence they carried out & they won’t tell me.”
He added that the FCA needs “a functioning system for reporting & recognising crime.”
“This has totally ruined my life! I have lost my life savings & will have to sell my house that I was renovating, I now don’t have the income or time as I have to work extra time instead of relying on my previous savings income.”
An FCA spokesperson 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."
Last month the watchdog’s chair was cleared of wrongdoing after an investigation regarding his handling of a whistleblower’s complaint.
A former employee claimed Ashley Adler failed to keep their identity secret. The investigation found that he had sought to follow through on the complaint.
If you are experiencing feelings of distress, or are struggling to cope, you can speak to the Samaritans, in confidence, on 116 123 (UK and ROI), email jo@samaritans.org, or visit the Samaritans website to find details of your nearest branch.
