An influential member of the Treasury Committee has raised concerns the FCA cannot run its budget effectively after it posted a £58.3m loss in the year to 31 March.
In its annual report, published last week, the FCA said its losses were driven by a £33.4m actuarial loss relating to its defined benefit pension scheme. It also blamed £30m in set-up costs relating to its new remit for consumer credit regulation, which will not be recouped for another 10 years.
The FCA made a £29.3m loss in 2013/14.
Conservative MP Mark Garnier is one of four MPs returning to the TSC after the election. He says the committee remains concerned about the way the regulator is carrying out its work, particularly around the closed book review and the misselling of interest rate swaps.
He says: “The regulator still has to answer very big questions over how it’s performing.
“Obviously we look at the FCA on a regular basis so we will definitely go through their accounts. The fact that the FCA cannot run a balanced book is quite significant.”
In March, TSC chairman Andrew Tyrie raised concerns of “systemic weakness” at the regulator, and demanded complete a review of internal communications and responsibilities by the end of October.
He argued the regulator’s handling of its closed book probe suggested there were broader problems at the organisation, including “the FCA’s communication methods, possible poor working relationships between divisions, the board’s effectiveness, and insufficient focus by its staff on the FCA’s objectives, among other things.”
FCA officials sit in front of the influential TSC every six months, with the next session expected in the autumn.
The annual report also revealed FCA fines totalled £1.42bn in 2014/15, up from £432.1m in 2013/14.
Of this, £1.36bn was paid to the Treasury. A deduction of £42.6m is made by the regulator to cover enforcement costs, which the regulator says will be returned to fee payers in the following year.
Gary Matthews, director, Matrix Capital
We have seen regulatory fees increase over the last couple of years and I suspect that will continue to be the case. We are encouraged to respond to the FCA but it doesn’t seem to make much difference. It just seems like what they say goes.
Alan Smith, chief executive, Capital Asset Management
Our own bills have gone up two or three times over, and 90 per cent of that is the FSCS. At the same time, the FCA maintains a very expensive DB pension scheme and offices in the centre of London. It is the regulated firms which pick up the costs, and there’s a question over whether there is value in the system.