Five-year plans can often count for as little or as much as their authors want them to. But for the Financial Conduct Authority (FCA), the stakes are a little bit higher.
Many organisations now produce the online equivalent of the glossy sales brochure, containing references to supposed notable recent achievements and optimistic talk of future visions, strategies and targets. Some may be held to account regarding them at a later date. Others may not face such scrutiny. It is hard to believe that the FCA will face anything less than very close examination now that it has published its new five-year strategy.
The FCA plan for 2025-30 contains four priorities. One priority is for the FCA to be a “smarter" regulator that improves its processes and embraces technology to be more efficient, effective and predictable. The others relate to supporting sustained economic growth, helping consumers “navigate their financial lives’’ by boosting trust and innovation and provision of support, and focusing on those who use their regulated status to perpetrate financial crime.
The aim, according to FCA chair Ashley Alder, is to deepen trust in financial services. This is an understandable and laudable aim for a body that regulates the conduct of more than 40,000 firms and is the biggest prudential regulator in Europe. But it could be argued that the FCA has more to prove than most, as its list of detractors has been steadily lengthening in recent years – arguably in direct correlation to the series of mishaps it has endured.
The FCA, therefore, has to come good on its priorities. If it doesn’t, its failure will provide more ammunition for its critics – and they are already far from short of that.
To take one example, the FCA’s first priority for 2025-30 - to become a smarter, more effective regulator - comes just four months after it was branded “incompetent at best, dishonest at worst” in a parliamentary report. That report followed a three-year examination of the FCA’s work which uncovered “very significant shortcomings’’. The report emphasised the sheer scale of economic crime in the UK and how vitally important it is that the FCA is delivering on its aim of protecting the consumer. Those two points could be at least part of the reason for the FCA’s new third and fourth priorities, regarding consumer support and tackling financial crime.
It could be argued that the FCA’s second new priority - to support sustained economic growth – is less easily linked to its previous problems. But the regulator has faced criticism for a variety of actions that could be said to have done little for the UK’s economic wellbeing. The FCA’s handling of the interest-rate hedging mis-selling scandal led to the All-Party Parliamentary Group on Fair Banking arguing that the regulator had unjustly excluded approximately 10,000 businesses from the redress scheme. Its on-then-off proposal to publicly disclose company investigations before enforcement action is taken saw it accused of looking to damage firms’ reputations unfairly and deter investment in UK financial services.
On a more headline-grabbing note, the FCA’s handling of the collapse of London Capital & Finance (which was an FCA-authorised mini-bond firm) and its initial inquiry into the relationship between the former Barclays boss Jes Staley and the convicted paedophile Jeffrey Epstein have also made it difficult for the FCA’s supporters to fight its corner.
There have been other difficult issues for the FCA but there is little point in listing them all - the situation is clear. The FCA has had many problems, and it has tried – with little success – to overcome them. It has now put in place a five-year plan that details its priorities. Those priorities are commendable. But in simple terms, the FCA’s one overarching priority has to be to put right the wrongs – and stop new ones arising. Otherwise its post-2030 future may look very uncertain indeed.
