A cross-party parliamentary group has sharply criticized the Financial Conduct Authority (FCA), the UK’s primary financial watchdog, labeling it "incompetent" and incapable of effectively performing its regulatory duties. The scathing report, compiled by the All-Party Parliamentary Group (APPG) on Investment Fraud and Fairer Financial Services, calls for sweeping reforms to the FCA following years of controversies, independent reviews, and allegations of misconduct.

Key Criticisms of the FCA 

The APPG highlighted several major failures in the FCA's operations, accusing the regulator of: 

- Delayed Responses: Acting too slowly—or not at all—in addressing financial scandals where consumers and small businesses suffered harm. 

- Whistleblower Neglect: Ignoring crucial information provided by whistleblowers, further enabling financial misconduct. 

- Toxic Culture: Fostering a defective internal environment plagued by bullying, discrimination, and retaliation against dissenting voices. 

- Opaque Leadership: Displaying a lack of transparency and accountability, with accusations of dishonesty at the highest levels. 

Bob Blackman, co-chair of the APPG, condemned the FCA for being consistently "too little too late—or not at all" in tackling financial malpractice.

Evidence of Mismanagement 

The damning conclusions are based on two and a half years of testimony from 175 contributors, including whistleblowers, scam victims, and current and former FCA employees. Key findings include: 

- Internal Failures: Reports of bullying and retaliation against employees who raised concerns, with former staff describing the FCA’s workplace culture as the worst they had experienced in decades.

- Resistance to Change: Despite launching a transformation program, critics argue the FCA has failed to make substantive improvements. 

Proposed Reforms 

The APPG outlined a series of recommendations to overhaul the FCA’s structure and operations, many of which would require legislative action: 

1. Integrity Measures: Enforce a zero-tolerance policy for misconduct or dishonesty within the regulator.

2. Independent Oversight: Establish a supervisory council to assess the FCA’s performance and ensure accountability. 

3. Revised Funding Model: Overhaul the FCA’s funding structure to better align with its regulatory responsibilities. 

4. Leadership Overhaul: Implement stricter criteria for senior leadership appointments to address concerns about competence and integrity.

FCA Responds to Criticism 

The FCA, which was not given access to the full report before its release, defended itself against the accusations: 

- It expressed sympathy for victims of financial misconduct but rejected the APPG’s characterization of the organization. 

- The regulator emphasized its ongoing transformation efforts, claiming it has learned from past mistakes to better protect consumers, markets, and the economy. 

Parliamentary Impact and Next Steps 

The APPG’s findings will be presented in Parliament, likely intensifying scrutiny of the FCA and increasing pressure for legislative and structural reforms. The revelations add to existing calls for a more transparent, accountable, and effective financial regulator, with lawmakers urging swift action to restore trust in the UK's financial oversight framework.

Source: bbc.co.uk