This is a first; MPs will debate the failings of the FCA in the Commons on 1st February. Has this caught you by surprise? I certainly didn’t see it coming, but what will it mean if a ‘no confidence’ vote comes out? Back to the drawing board I guess, a new governing body, a new catchy acronym? Equally, what if it’s a yes vote in support of the FCA – back to ‘business as usual’ and we’ll say no more about it?
I can’t recall anything like this happening before, certainly not in the UK anyway – the competency of a financial services regulator being brought in to question – the repercussions could be huge!
Has anything like this ever happened in any other jurisdictions? If so, it would be interesting to know what the outcomes were in those situations.
What will be discussed?
The debate will apparently include discussions around how the regulator conducted its investigation into firms that sold the failed Connaught Income Series 1 Fund. The fund, described as “very low risk” was suspended in March 2012 after it was discovered that investors faced losses of up to 50%.
MPs will also debate the misselling of interest rate hedging products, which has resulted in around £2bn being paid out by banks to businesses who bought the products. Of interest here will be the ‘deal’ struck by the FCA with nine banks regarding the terms under which redress should be paid. Essentially, redress was to be paid to those customers deemed not to meet ‘sophisticated customer’ criteria, which some critics suggest unfairly favoured the banks.
How independent are the FCA?
There’s also the question mark around the FCA’s independence, a fundamental requirement to ensure the decisions they make and the actions they take are not in any way influenced by anyone else. Rumours abound that the Government had interfered in the decision resulting in Martin Wheatley stepping down from his post as CEO of the FCA last year, as well as the decision to shelve the much anticipated review into banking culture. I wonder whether the commons debate will look at this too, perhaps it should, perhaps this sort of debate is long overdue – what are your thoughts?
What’s the motivation?
Maybe caution should be observed though. For example, the motion is to be tabled by Guto Bebb, Conservative MP for Aberconwy. What’s his motivation for doing this? Does he perhaps have some prior history with financial services regulation that allows him to see where the FCA are headed, or is he simply representing issues and challenges that have been brought to him by his constituents? Mr Bebb is not someone linked to the Treasury Select Committee, so it’s curious what his gripe is. Had the motion been brought by the TSC, then I suspect the debate would engage more interest – or am I being naïve?
Interesting that it’s deemed important enough to warrant a three hour debate, it’ll be even more interesting to see who actually attends on the 1st February.
Either way, it’s an interesting development and I’ll be really interested in listening in on 1st February, you never know, a new chapter in the ever-evolving UK regulatory story might be about to start.
If you’re interested in learning with ICT, view all courses in AML, governance, risk and compliance and financial crime prevention here. You can find out more about all our courses at a free ICA Open Day/Roadshow, find out more here.
To stay updated on the latest developments in governance,risk and compliance, anti money laundering and financial crime prevention, please follow us on either LinkedIn, Facebook and Twitter where you are guaranteed to be notified when our next blog post goes live!