A group of MPs and peers have published a scathing report into the UK's main financial regulator, the Financial Conduct Authority (FCA).
Describing it as “incompetent”, they believe that the FCA “fails too often” to fulfill its functions and are calling for its overhaul.
The regulator has been heavily criticized by several independent studies in recent years.
The FCA did not see the full report before its publication, but a spokesperson told the Financial Times: “We sympathize with those who have lost out through wrongdoing in financial services, but we strongly reject the characterization of the organization.”
“We have learned from historical problems and transformed ourselves as an organization so that we can meet the expectations of consumers, the market and the economy as a whole,” he adds.
The report, which is due to be presented to Parliament later on Tuesday, was produced by a cross-party interest group and is based on written evidence from 175 respondents, collected over two and a half years.
They included whistleblowers, victims of scams and current and former employees of the regulator.
The report concluded that the FCA was “incompetent at best, dishonest at worst”, that its actions were “slow and inadequate” and that its leaders were “opaque and unaccountable”.
He said the FCA had failed to properly investigate and act on information provided by whistleblowers and that the transformation program undertaken by the regulator had “not worked”.
The report was produced by the All-Party Parliamentary Group on Investment Fraud and Fairer Financial Services, made up of 30 MPs and 14 members of the House of Lords.
Current and former FCA staff said the regulator had a “flawed culture” in which “errors and inaction” were “all too common”.
A former FCA employee told the parliamentary group he experienced “the worst staff culture I have experienced in almost 40 years”.
A current FCA staff member said they had tried to raise “serious and difficult issues” but had been “criticized, bullied and sidelined”.
Those who challenged an “official line” imposed from above on a given issue were “bullied and discriminated against, or even expelled,” some current and former employees said.
Suggested reforms – some of which will require legislation – include:
Introduce a zero tolerance policy for lack of integrity. Establish an oversight board to review the effectiveness of the FCA. Change the way the FCA is financed. Review the way the FCA leadership team is appointed.
The report follows a series of scandals in which financial services firms have been accused of mistreating consumers and small businesses, and the FCA has been “accused of doing too little, too late – or nothing” to prevent wrongdoing, said Bob Blackman, co-chairman of the group.
