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Treasury Committee member hits out at £58m FCA loss


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.

Adviser views

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.



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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Dominic Thomas 10th July 2015 at 3:50 pm

    Yes but… its a little trite coming from the Treasury who basically took £1.3bn in fines off the FCA, which could have been used to pay the entire FSCS bill and seen the FCA have a profit. As with all DB schemes, it has to be maintained within the rules (it is closed).

    I’m not convinced that this is entirely the fault of the FCA, but of political engineering that sees a quick profit for whoever is in power by using fines to pay for other things… however worthy they may be..

  2. Wind up their Final Salary Scheme. That’ll help save costs.

  3. Julian Stevens 10th July 2015 at 8:46 pm

    “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.”

    Which tells us what we’ve known all along, namely that the “oversight” on the part of the NAO is nothing but yet more sham window-dressing.

    As for Andrew Tyrie’s “demand” for “a complete review of [the FCA’s] internal communications and responsibilities ~ what will or can he do if his October deadline is ignored? And, when the FCA’s review is eventually presented, what will or can he do if he and the Committee aren’t satisfied with its contents? The TSC has no powers to issue or enforce any directives so the FCA is free merely to brush them aside with a token undertaking or two to “take on board” the Committee’s recommendations (which, in practice, it almost certainly won’t). It’s all just impotent posturing.

  4. My first question is; how influential is any member of the TSC when it comes to the regulator FCA ? IMHO “very” should be changed to “not at all”

    The second and most important is; in what universe is it fit and proper, to allow an organisation as big and politically valuable as the FCA, to set, and be in charge of its own budget ! this is just madness, its like putting an alcoholic in charge of a pub, the only downside is the FCA are not going to die (any time soon) of liver failure, mores the pity !

    Mark (Garnier) can I give you just one bit of advice, sit down in a quite room and just think about what the FCA really is ! what it represents, what is it designed to do and achieve, and how it really (and I do mean really) tackles its objectives (if it does at all)

    We cease to live in a free society when those that govern or in this case regulate have a complete disregard for those who they regulate and more importantly those who like yourselves at the TSC who have been given charge to question ?

    You cant run an organisation where the well being of itself is taken at the cost of others ? especially as it has the power to self govern with no accountability !

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