In response to criticism from a cross-party group of MPs that the UK’s Financial Conduct Authority (FCA) has failed to reform after years of scandal, the FCA’s chief executive, Nikhil Rathi, has defended the organisation’s track record citing that it is “tackling financial crime… on a scale that has never been done before in the UK”. The MPs had claimed that the FCA was “incompetent”, and that its culture had “got worse rather than better”. They also accused the regulator of failing to properly investigate the banks and other financial organisations it regulates, suggesting it may be too close to them.
This report was released after the fallout against the FCA’s handling of the Neil Woodford investment scandal and other such controversies, as well as criticism from previous reports. Rathi, in an interview with BBC Radio 4’s Money Box show, countered these criticisms and argued that the regulator had improved. He noted that the FCA is making “record numbers of financial crime prosecutions” and that it is “one of the most evolved consumer protection regimes in the world”.
The report also suggests that the FCA has been “captured”, noting that there are “unmanaged conflicts of interest” due to the regulator’s role in protecting both consumers and promoting economic growth. The report suggested that the FCA’s leadership should be replaced “if necessary”, calling its current leaders “opaque and unaccountable”. The report further suggested that the FCA ought to be only a regulator focused purely on consumer wellbeing, while the Government addresses economic growth.
Chancellor Rachel Reeves, however, is pushing for growth to be pursued, where there can be an increase in risks for consumers. This change allows more companies to list in the UK, such as on the London Stock Exchange. Rathi admitted that such a step does bring more risk into the system and increases the number of things that could go wrong, but it was determined that this was necessary to support the required growth in the economy.
Ultimately, despite criticism from MPs, Rathi defended the FCA and maintained that the organisation is committed to improving operational performance
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