Inquiry into FCA’s Future Mission

The new head of the Financial Conduct Authority, Andrew Bailey, has announced a consultation into the “Future Mission” of the organisation. The FCA does of course regulate financial markets and should be protecting retail investors (or “consumers” as the consultation prefers to call them). However it has been repeatedly criticised in the past for the following failings:

– Weak and ineffective regulation.

– Not stopping new abuses soon enough.

– Failing to look after the interests of retail investors but rather protecting those of large financial institutions (for example, fixed interest “bonds” such as PIBS which turned out to be anything but, and in the case of Lloyds ECNs).

– Secret investigations of alleged wrongdoing which can drag on for years, with the outcome not necessarily disclosed.

– Allowing the nominee system to erode individual shareholder rights.

– Permitting dilutive “placings” as opposed to rights issues.

– Restructurings and schemes of arrangement not being effectively regulated.

One could go on at length on this subject which we will no doubt do when we respond to the consultation. Perhaps some of the problems are due to a lack of resource but the complexity of the regulations now in place prejudice an effective regulatory approach. However it does appear that there is a need for some reform.

If anyone has particular suggestions for what should be covered in the response to the consultation, please let ShareSoc know.

The note from the FCA on the consultation can be read here: https://www.fca.org.uk/publications/corporate-documents/our-future-mission

Roger Lawson

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One thought on “Inquiry into FCA’s Future Mission

  1. A cynic would say the consultation is displacement activity, intended to make it look like the FCA is responding to concerns about its effectiveness while actually avoiding addressing deep-seated concerns about its effectiveness and independence.

    The exercise asks limited questions about the boundaries of the organisation’s scope, while ignoring the elephant in the room: does the FCA protect senior figures in the City from the public, rather than the reverse? And can this ever be fixed while it’s funded by those it regulates, and there’s a revolving door between the regulator and the industry?

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