MPs brand Financial Conduct Authority ‘incompetent at best and dishonest at worst’

The financial regulator is “incompetent at best and dishonest at worst”, according to a scathing assessment of its record by a group of MPs and peers.

In a report published today, the Financial Conduct Authority (FCA) is found to have suffered “very significant shortcomings” in its ability to tackle fraud and other issues, while its leadership remains “opaque and unaccountable”.

A nearly three-year investigation into the regulator, which gathered evidence from 175 whistleblowers, fraud victims and former FCA employees, revealed a culture where “dishonesty and deceit” are commonplace.

The FCA is “widely seen as incompetent”, the report states.

Those raising issues at the organization said they were “criticised, bullied and marginalized” and alleged the regulator “actively discourages staff from raising serious and challenging questions”.

The All-Party Parliamentary Group on Investment Fraud and Fairer Financial Services, which wrote the report, is made up of around 30 MPs and a dozen House of Lords peers.

The report concluded that the picture painted by the FCA was “not pretty” and that its investigation had uncovered “tragic stories of regulatory failures that caused enormous financial and emotional distress.”

Current and former employees described the watchdog as having the “worst staff culture” they have ever experienced, characterized by a “lack of trust” and “staggering arrogance”.

Others accused the regulator of acting “in bad faith” and of being “culturally and economically aligned with banks and other large licensed businesses”, making it “unwilling to act against their interests”.

“The picture painted is not pretty,” the report said. ‘The FCA is seen as at best incompetent and at worst dishonest. Their actions are slow and inadequate, their leaders opaque and irresponsible.’

The committee called for a series of reforms and, if it resisted the changes, suggested that a Royal Commission be created to remove responsibilities from the FCA and give it other institutions.

But an FCA spokesperson said: “We sympathize with those who have lost out as a result of irregularities in financial services, but we firmly reject the characterization of the organisation.” “We have learned from historical issues and we have transformed ourselves as an organization.”