8:47 am, November 27, 2024
A new report into the Financial Conduct Authority (FCA) has found the body to be ‘incompetent’ and ‘dishonest’, as the watchdog’s handling of the motor finance scandal continues to be questioned.
The damning report was produced by a cross-party parliamentary group, made up of 30 MPs and 14 peers, which has been investigating the FCA for the past three years.
It spoke to over 175 individuals, including including former employees, scam victims and whistleblowers and concluded the the picture painted of the financial regulator was ‘not pretty’.
The full report was presented to Parliament yesterday (Nov 28) with evidence suggesting the watchdog is ‘not fit for purpose’.
‘The FCA is seen as incompetent at best, dishonest at worst. Its actions are slow and inadequate, its leaders opaque and unaccountable,’ the report reads.
‘Issues are rooted in the way the organisation is being led, conflicts of interest and the culture that the successive leadership teams have created.’
Testimony gathered by the parliamentarians includes victims of alleged pension and investment scams who say the regulator failed to protect them or to spot ‘red flags’ at fraudulent financial firms.
Other financial sector whistleblowers said they felt the FCA did not do enough to investigate their allegations or prevent misconduct from continuing.
Some current and former employees alleged the FCA has a ‘defective’ culture, where ‘errors and inaction’ proved common.
‘Those who challenge a top-down official line on any given issue are bullied and discriminated against, or even managed out,’ the report says.
In it’s recommendations, the cross-party group suggested changes to funding, a ‘no tolerance’ policy for lack of integrity and changes to the way senior leadership is appointed.
They concluded that ‘urgent action’ needs to be taken to address the concerns, or there is a risk that ‘stakeholders’ patience is exhausted’ and discussions will shift from reforming to replacing the organisation entirely.
The findings represent a hammer blow to the regulator’s credibility at a time when all automotive eyes are on it.
The body’s handling of the motor finance crisis has come under the spotlight in recent times, especially following last month’s landmark Court of Appeal ruling against Close Brothers and FirstRand Bank.
The landmark decision saw lenders pause new finance business as the industry scrambled to understand the ruling with the Finance and Leasing Association saying that the FCA has ‘serious questions to answer’ over its handling of the situation.
The body is currently continuing its investigation into the mis-selling of vehicle finance and has recently announced a string of delays to the period dealers have to handle complaints.
In response to the latest report, 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.’
