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FCA under fire over lack of transparency following opaque reports


The FCA is under fire after a series of publications perceived as lightweight has left the industry guessing what action has been taken behind the scenes.

Following its report on due diligence report in February, commentators expressed surprise at the brevity of the six-page document and called for the regulator to be clearer about the consequences for firms failing to comply with its expectations.

Similar concerns were raised over the FCA’s response in April to its 2015 thematic review of inducements where no detail was given of the type of firm that was found to have flouted the rules.

Likewise, in March, the regulator published a short statement after a probe raising concerns that competition laws were being broken over distribution deals and compliance processes.

The statement did not provide the name, type of firms or detail of the kind of distribution deals in question.

Highclere Financial Services partner Alan Lakey says advisers are struggling to understand what the regulator requires of them. He adds: “We are very short on practical guidance and very long on theory.”

The Compliance Consortium chief executive Joanne Smith agrees it is hard to ascertain the scale of poor behaviour when it is unclear what firms have been disciplined.

On the due diligence report, she says: “According to the findings only four firms had any corrective action. If you look at the report it might say there is a problem in an area but it doesn’t say how many organisations or the types of organisations because the report covers one-man-bands to fully formed platforms. It is difficult to say how big the problem is.”

Smith would also like to see the regulator state explicitly where firms have failed on culture issues.

She says: “If culture is at the heart of the FCA’s agenda they should be calling out examples of poor cultural behaviour. For example, on inducements, is there any reason why going to a sporting event or a golf course would be to the benefit of customers? Why don’t they just come out and say it?”

But Pinsent Masons senior associate Michael Ruck says ongoing supervisory work or enforcement investigations, as well as data protection and confidentiality requirements, can prevent the FCA from providing detailed information.

He says: “In terms of how they word it within the report, to say a firm has failed and then indicate what kind of penalty is something they do not do lightly because the firm may not have had the opportunity to challenge that internally.”

However, Ruck says the regulator could do more, including indicating what firms have done that is good and what they have done to improve.

Syndaxi Chartered Financial Planners managing director Robert Reid suggests the FCA includes a section at the back of its reports detailing what it means when it refers to “firm A” or “firm B” so the market has more of an idea of the type and size of firm that has fallen short.

An FCA spokeswoman says: “We publish more information than ever before and through programmes like Live and Local are making the FCA more accessible to the firms we regulate. We publish our board minutes, expenses, our internal audit reports and key performance indicators. Through our data strategy we make available much of the information we collect. We attended over 800 events in the last two years and dealt with 789 requests made under the Freedom of Information Act.”

She adds: “However, we are legally required to protect confidential information that relates to the business or affairs of any individual or firm. The reason this is law is because having a clear confidentiality restriction encourages the free-flow of information.”


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Very clear evidence, that the regulator (FCA) is bogged down by its own rules, processes and regulations

    Reap what you sow; springs to mind !

    If, what the FCA spokeswoman states is factual, can we safely say, most of the information that is provided/published (from which ever medium) is……. crap ?

  2. Julian Stevens 11th May 2016 at 10:49 am

    One might reasonably think that by now the FCA would have realised that merely publishing ever more titanic container loads of information with ever increasing frequency doesn’t actually help advisers gain a clearer idea of what they should be doing. What actually happens is that more and more of them either reach the end of the latest reading marathon with very little idea of what’s expected of them or they give up halfway through or they just shove it onto a pile of stuff to be read at some later date, the ultimate fate of which is that after a year or so it just gets chucked in the bin.

    Meanwhile, the time spent actually engaging with clients is increasingly squeezed and the costs of providing advice continue to rise inexorably.

    But no, the FCA just doesn’t see it this way. That perfect pot of gold at the end of the rainbow remains as elusive as ever.

  3. Martyn Harris 6th May 2017 at 7:48 am

    It is of no benefit to the public if a regulator does not protect the public. Protection is a defining responsibility, and regulators only provide prevention, covert negotiations to address in most cases criminality, nullifying protection of the public, placing representation as a priority, unless transparency of outcomes are provided how does the Government Minister who Sponsors the FCA and the public know if they are being protected and are protected absent transparency. Absent transparency we the public are not protected, a democratic obligation that confidentiality cannot be used as a cloak to hide behind.
    Interestingly the FCA states it has to comply with the DPA 1998 yet has made a Memorandum of Understanding with the SRA to have covert access to SRA complainants ‘Privilege’ information, absent the data owner express permission or a court order, so when it suits they ware the cloak of the DPA then remove the cloak to suit.
    The key fact is the FCA have a obligation thus a public duty under the Consumer rights Act 2015 and the Consumer Protection from Unfair Practices Regulation 2008 to provide Consumer Protection. They undertook these duties from Trading Standards, thus again manipulating their obligation to suit.
    In ending what is the use of the rule of law, if bogged down with independence from Government Intervention, thus absent ‘Checks and Balances’, which as determined in the court concerning Brexit, parliament provides the law, then provide the public protection and stop Regulators being ‘Oligarchic’ and providing a ‘diarchy’ for their members, the ‘privilege few’, at the expense of the public.

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