The Financial Conduct Authority (FCA) has been severely criticised today (27/3/2015) in a report issued by the Treasury Select Committee. Here are a few things they say in their overall conclusions about the events surrounding the press briefing on the Government’s planned review of the life insurance market, which caused share prices in some companies to drop sharply.
“The events of 27 and 28 March…..revealed multiple flaws in the FCA’s processes and practices. These failings went right to the top of the organisation, including the Chairman and Chief Executive”.
“Procedures within the FCA for identifying and controlling the release of price sensitive information were inadequate and not of the standards that the FCA expects of the firms it regulates”.
” The FCA itself created a false market in life insurance shares, despite being the markets regulator and containing the UK Listing Authority”.
“The FCA’s response to the serious incident on 28 March was seriously inadequate. In particular, the Executive Committee failed to react urgently and effectively…”.
“Overall, the FCA failed to meet the minimum standards that it sets for listed firms”.
“If the Executive Committee has failed properly to discharge its responsibilities, then the Board has consequently failed in its duty to oversee and challenge the Executive Committee effectively. It is also clear from the evidence that the Board as a whole failed in its duty to identify and manage risk”.
The report recommends an internal examination of the FCA’s methods and an external review of its effectiveness, and concludes by saying that financial services consumers (i.e. you and me) need a robust consumer protection body on which they can rely. They suggest a wider review of the FCA’s activities and its governance in the next Parliament.
Comment: such a review is long overdue. The FCA is slow and ineffective at regulating the market and seems to be short of adequate resources to do its job properly. This report simply highlights the problems within the organisation.