UK Lawmakers Slam FCA
Britain’s Financial Conduct Authority (FCA) gets a shellacking from MPs
The Financial Conduct Authority (FCA) in Britain has been severely reprimanded by legislators following its mistreatment of consumers and small companies in the UK. However the FCA was fortunate in that it was able to avoid a no-confidence vote by lawmakers. At heart is the issue of how the FCA has been supervising banking institutions which pay small businesses for inappropriate selling of financial hedging products vis-a-vis interest rates.
Lawmakers have criticized the FCA as being incapable of ensuring high standards in the banking industry across the board. Accusations of being an impotent and blundering authority have been levelled against the Financial Conduct Authority by various lawmakers, as they launched scathing attacks on the FCA for failing to publish timely reviews of mistreatment of customers by the RBS (Royal Bank of Scotland).
What does the FCA do?
The Financial Conduct Authority (FCA) is responsible for the regulation of financial firms in the United Kingdom. FCA compliance is designed to instill in customers the trust that they need when they interact with businesses in the UK. The goals of the FCA are to protect the financial markets by maintaining the integrity of the financial system in the United Kingdom, the protection of customers at all times and the promotion of effective competition to serve the interest of consumers in the United Kingdom.
In addition to the FCA, several other bodies are involved in maintaining the integrity, competitiveness and fairness of financial regulation in the United Kingdom. These institutions and bodies include the Financial Policy Committee, The Prudential Regulation Authority, the Bank of England, and the Treasury. The FCA also works outside of the UK borders to ensure that European Union financial standards are compliant with UK standards. The FCA also works hard to combat financial crimes, enhance market integrity and promote effective competition.
Problems faced by the FCA
In recent times, the FCA has come under increasing pressure from the British Finance Ministry under George Osborne. In 2015 Osborne fired the Chief Executive of the FCA – Martin Wheatley. The new chief executive officer of the FCA is Andrew Bailey, former deputy governor of the Bank of England. There is growing concern from opposition lawmakers that the Financial Conduct Authority is being weakened from within, with consumer watchdogs being removed and replaced by government stooges.
However, there is a feeling among many that the new chief executive officer of the FCA will do a sterling job. The FCA operates independently of the government, but it is the heavy-handed nature of government involvement in all aspects of the FCA that has led some to question its independence. While consumers have not entirely been treated with the respect they deserve by the FCA, the overriding opinion is that this financial authority has done a respectable job to date.
The FCA has been severely criticized for its inability to closely and effectively patrol the actions of banks which are engaged in rigging currency markets and interest rates. Had the FCA been slapped with a vote of no confidence by parliamentarians, the entire global financial system would have lost complete confidence in the independent authority that oversees standards, integrity and fairness in the British financial services system. The FCA was born barely 3 years ago, at a time when oversight and integrity were desperately needed in the UK financial system. The fact that a vote was not held on Monday, February 1st 2016 was a big sigh of relief for the FCA, but a big wake-up call at the same time.