Thoughts and opinions
3 mins read
Updated on 5 February 2025
Our subject expert
John Pauley
Partner - Financial Services
A new Supplementary Report, published on 3 February 2025 report published by the All-Party Parliamentary Group (APPG) on Investment Fraud and Fairer Financial Services has intensified scrutiny of the Financial Conduct Authority (FCA). This report builds upon the APPG’s initial findings from 26 November 2024, which raised serious concerns about the FCA’s effectiveness, leadership, and approach.
The original APPG report, based on testimonials from 175 individuals, presented evidence of systemic issues within the regulator. While it acknowledged that most FCA employees are not at fault, the report highlighted weaknesses in recruitment, training, leadership, and governance that have created conflicts of interest and cultural problems within the organisation:
The APPG wishes to emphasise that whilst the overall impression of the FCA that the evidence generates is troubling, suggesting that the FCA is not fit for purpose, this does not reflect on the calibre, quality and mindset of most of the FCA’s employees; it is clear that the issue is not with them, but with the way they are being recruited, deployed, trained and managed - most of the issues are rooted in the way the organisation is being led, conflicts of interest and the culture that the successive Leadership Teams have created.
(APPG Report, page 264)
The report identifies several areas for improvement:
The APPG recommends significant reforms to reshape the FCA’s regulatory approach, including:
In addition, legislative changes recommended for the Government include:
Following the initial report's publication, the FCA has responded, stating that it does not recognise the portrayal of its organisation in the report and asserting that it does not reflect the day-to-day experiences within the regulator. However, the FCA reiterated its commitment to working with the government and parliament to address concerns.
This response prompted the APPG to publish the Supplementary Report on 3 February 2025, which presents further evidence and perspectives on the FCA’s engagement with Parliament and stakeholders. The new report underscores the importance of proactive engagement between the FCA and parliamentarians, particularly in addressing consumer protection and regulatory oversight concerns.
The Supplementary Report highlights:
With Parliamentary debates ongoing, APPG Vice Chair Sarah Bool MP reiterated the view in a press statement that additional oversight may be needed:
There is no doubt the FCA has a difficult job to do. This we understand. However, it does raise the question as to whether the FCA just has simply too much to do. Even if the FCA’s sole role was just to deliver on consumer protection alone, that would be a big exercise—especially given how large and complex the UK’s financial sector is.
These reports and ongoing discussions could signal major changes in UK financial services regulation. Firms should prepare for:
As specialists in financial services regulation in the UK, we remain committed to helping you navigate these evolving challenges as they apply to you while meeting your compliance obligations. Our team continues to monitor these developments closely and will provide updates as reforms are implemented.
About our expert
Partner - Financial Services
John is a specialist financial services regulatory solicitor who advises fintechs, payment service providers, e-money institutions, consumer credit firms, merchants and many more on navigating complex UK financial regulation.
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