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McDermott: FCA must be above politics and media to build trust

Tracey McDermott FCA 700x450.jpg

Acting FCA chief executive Tracey McDermott says the regulator can only rebuild trust if it is seen to “be above the political and media fray”.

In recent months the regulator has been criticised for a perceived lack of independence, particularly following its dropping of a banking inquiry.

Speaking at an enforcement conference last month, the text of which was published yesterday, McDermott set out how she sees the role of the FCA.

She said: “As regulators, enforcers or prosecutors, it is not our job to satisfy public opinion, to find scapegoats, to take sides or to seek retribution. It is not our job to jump to conclusions, to have knee jerk reactions, to be immediately on the defensive.

“It is our role to divorce ourselves from the emotion, the speculation and the hyperbole, however difficult that is.

“To ensure we find the facts without fear or favour – through processes that are objective, fair and rational – and then, and only then, to recommend the appropriate action. Including, sometimes, saying no one is at fault.”

She said the outcome of the Hillsborough investigation taught three lessons.

As a result the FCA must convey justice, so the public are confident wrongdoers had been caught; act transparently and quickly; and must be seen to be fair, she said.

She added: “Without trust and confidence, financial services cannot thrive. After all, even the most basic building block of the system – money – is only a piece of paper unless the promise to pay can be believed.

“So it is critical that society has confidence that the authorities will tackle the most challenging issues with an open mind and that where fault is found, it will have meaningful and visible consequences.”

McDermott is due to leave the regulator in July, when new chief executive Andrew Bailey takes over.

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Comments

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

  1. So in short…… “only God will judge us”

    This is a bit disturbing and reads like Miss Mc D is a rambling maniac !

    Tracey……. the trust you speak of, sounds more like an after thought, as the main message is fear ! I am not sure who the hell you think you are ?

    Trust and confidence ? I don,t think so, it reads like, every-one should accept or decisions and methodology whatever this may be !

    Have got a bloody nose from the MP’s demanding you are to look at the product levy ?……….. give the baby her bottle !

  2. Julian Stevens 8th June 2016 at 10:54 am

    Given the relentless deterioration of confidence in the FSA/FCA’s competence and trustworthiness over the past few decades, it’s likely to take rather more to repair it than disengaging from the media and pretending that regulation is impervious to political influence. Does the FCA plan to decline all future requests to appear before the TSC to explain its latest screw-up? And still you’ve not explained why you withdrew from the running to be the next CEO, with Andrew Bailey then being swiftly manoeuvred into the position without so much as an interview. Political influence? Surely not.

  3. Trust is hard earned and easily lost. It is very hard to gain trust or respect when your organisation is effectively not accountable for its actions. Whilst I totally agree with the sentiment of the speech, there is an inevitable outcome of the regulators funding model.

    The banks and large insurance companies pay the highest towards the regulators funding and therefore demand the most representation. They can and do influence the regulator and we see this every day as the committees representing the industry are mainly large insurance companies, banks, networks and maybe one or two adviser and small players. You never see the goal face workers in larger numbers at these meetings, the ones that understand the most about the problem.

    There are many practical solutions to many of the current problems that strangely the regulator does not want change. Many of these would cause problems for large companies to implement.

    1) Product levy to fund FSCS. Why? They say its because they would need to change the law, so change the law. You purchase a new car you get a three year warranty. This is paid for within the purchase price. After the initial period there would be an FSCS charge to the product based on the claims against that product type, effectively an extended warranty. Why is this so complicated to understand. They believe it is better to make those that avoided the problems pay for those that did not. In other words punish the good and let the bad off.

    2) Taking ALL unregulated products out of the FSCS. The consumer needs to be educated. The only way to do this is just like the email and text scams do not refund the consumer money but make consumers aware. Highlight and report it, it would not take long before the consumer understood the difference between regulated and unregulated investments. The media would soon report the and this effectively is free education.

    3) Legal Long Stop for advisers. We are told that they see no need, that the client needs the confidence to be able to pursue a claim at any time. My response to that is fine, so we can scrap the MOT for vehicles. We MAKE vehicle owners review their vehicle to make sure its safe, but allow financial services products to run for 5, 10, 15, 20, 30 years or more and then judge the adviser when the client has NEVER serviced the product.

    So back to trust and being seen as above manipulation. The only way you as a regulator can ever gain this is to actually listen to those at the coal face, not middle and top management and change the way you are funded by a product levy so you can protect the consumer freely.

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