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MM leader: Give up the ghost on FCA independence

Natalie Holt website

“We are accountable to the Treasury, which is responsible for the UK’s financial system, and Parliament. However, we are an independent body and we do not receive any funding from the Government.”

This is how the FCA describes its role and how it operates. Advisers know all too well who foots the regulator’s bill, but after last week are probably less convinced of the FCA’s claim that it acts independently.

Martin Wheatley’s shock exit from the regulator, and George Osborne’s blatant involvement in his departure, means it is time to give up the ghost on this idea that the FCA is in any way independent of Government.

The noise around Wheatley’s fall from grace is the banking lobby has been whispering in Osborne’s ear that the FCA chief executive was too aggressive in his dealings with them. His “shoot first and ask questions later” comments, first reported by Money Marketing back in 2012,
have continued to haunt him all the way out the door.

Failing to renew a senior regulator’s contract should not be deployed as some sort of trophy to the banks, like a cat bringing home a dead mouse to its owner’s doorstep. There are parallels with the unceremonious sacking of Barclays chief executive Antony Jenkins, who failed to cut jobs hard and fast enough, and was not on board with the bank’s strategy around its investment banking arm. As one commentator put it: “The bad old days are back.”

Money Marketing is likely to be among the last people to come out in support of Wheatley – the FCA, and indirectly the man who heads it, has not always shown itself to be a friend of advisers.

Wheatley’s flat refusal to consider a refund for advisers who had been overcharged to the tune of £118m over five years will not be forgiven any time soon.

His tendency to deliver ad-libbed keynote speeches (as amply demonstrated by “shoot first”), not to mention the handling of the closed-book saga, also leave a lot to be desired.

But the era of record fines instilled under his watch is something to be commended. A regulator is supposed to take a hardline stance when it comes to misconduct, and from forex to Libor, that is what Wheatley has done.

The fact that banks are still making provisions to cover the cost of past wrongdoing suggests they are not so far down the path to reform that all should be forgiven.

Natalie Holt is editor of Money Marketing – follow her on Twitter here

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. FCA need to focus on what they mean by conduct and what they mean by outcome – this requires reals skill and finesse – but until the industry can be clearer what we all mean then regulation and compliance will be confused and over-stretched. David Jackman
    Author of The Compliance Revolution – out now on Amazon and ebook

  2. Absolutely Natalie a very timely piece – this “Peek a Boo Accountability” has gone far enough . The Treasury must acknowledge its fatherhood of the 3fs and be accountable for their actions. If the Government wants MAS it should pay for it and if the Treasury was paying for regulation would be bill be nearly £500m?

    However do not underestimate the desire of Treasury Civil servants to maintain a smoke and mirror environment around regulation so that ministerial embarrassments can be sent into the long grass. Witness Equitable, RBS HBOS etc.

    Today Libertatem will be writing to Osborne today asking him to explain why he will not take responsibility for a regulatory system that his Department created in the FSMA 2000 and clearly exerts significant

    The Treasury Select Committee is very interested in this area but Advisers need to support the work we are doing

    Garry Heath Libertatem.org.uk

  3. …Clearly exerts significant INFLUENCE

  4. Stewart Tomlinson 23rd July 2015 at 3:15 pm

    It remains a mystery as to why retail financial advice is regulated by the same body regulates massive investment banks and product providers. FIMBRA had its faults, but it knew its market.

  5. Stewart Tomlinson 23rd July 2015 at 3:16 pm

    body THAT regulates

  6. If anyone ever though that the FSA or the FCA were/are independent of Government they need to wake up and smell the coffee.

  7. Having all been set up by the government, how can any of the industry’s regulatory bodies have ever been independent? It’s hardly as if the government set up the FSA and then said: There you are, off you go, you’re on your own now and we shan’t interfere. You can do whatever you want, however you want. Actually, thinking about it, that’s pretty much what DID happen ~ until the FSA started making so many foul-ups that the government realised that having left it to its own bull-in-a-china-shop devices was a disastrously foolish move.

    The FSA used brazenly to peddle the lie that it was independent and the FCA followed suit, though eventually the calls for this lie to be withdrawn from its website were heeded and the FCA, instead, now merely suggests independence without actually spelling it out.

    If “we are an independent body and we do not receive any funding from the Government” doesn’t, at the very least, mendaciously imply independence from the government, then I’m hard pressed to think what might. Clear, fair and not misleading? It’s certainly none of those. Any lay person reading the FCA’s home web page might well still be misled into believing that the FCA is independent.

    Lies and double standards are still very much alive in regulation land.

  8. I don’t want the FCA to be independent of government when they produce such useless regulation. Stewart Tomlinson hit the nail on the head – why does the same regulator that oversees massive banks and product providers also oversee regulated retail financial advice? It beggars belief and this is why financial advice is so hamstrung from providing a cost-effective customer focused service to the end users. FCA – F***ing C*** Authority!

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