MPs sitting on the Treasury Select Committee will be handed copies of internal audit reports produced by the financial regulator, in its continuing battle to improve accountability.
The Financial Conduct Authority has finally agreed to provide the committee with copies of internal audit reports, though it will only do so one year after the regulator’s own audit committee has seen them and sensitive information will be redacted.
Following a back and forth exchange of letters between TSC chairman Andrew Tyrie and FCA chairman John Griffith-Jones, the FCA finally relented to demands that were first raised during an evidence session in parliament in February last year.
In a latter sent on 26 March this year, Mr Griffith-Jones proposed the FCA would provide the committee with copies of the internal audit reports one year after they have been given to the FCA’s audit committee.
The content will be redacted to remove firm-specific data that cannot be disclosed for legal reasons and to remove other information that would not be in the public interest, in line with the regulator’s exemption from disclosure under the Freedom of Information Act.
“I hope you will be reassured by the FCA’s commitment to resolving this issue and that we respect the committee’s entitlement to require the production to it of particular information,” stated Mr Griffith-Jones.
“At the same time, I hope also that you will understand should the FCA seek to revisit in the future given our continuing concern about the potential for harm to the effectiveness of our regulatory risk framework.”
This follows months of back and forth between members of the committee and the executive board of the FCA, on the back of concerns raised in sessions in the aftermath of the Davis report into the regulator’s bungled life insurance review briefing.
During a committee session at the start of February 2014, John Griffith-Jones, FCA chairman, was questioned by TSC chairman Andrew Tyrie about the internal audit reports. Mr Griffith-Jones confirmed that an executive summary goes to him and the full report goes to the audit committee that meets four times a year.
Mr Tyrie requested to see them and was told a ‘rain check’ would have to be taken, to which he responded: “I think you can take a rain check on a discussion with me about whether any redactions may be necessary.
“But if you are telling me you want a rain check on whether they can be supplied to the committee, I think there will be a major problem.”
On 3 March 2014, Mr Griffith-Jones wrote to Mr Tyrie to turn down this request. Then during another session on 9 September 2014, the issue was again raised with the chairman of the FCA, by committee member John Thurso.
Mr Griffith-Jones responded: “I beg you to consider the arguments about giving us a protected space in which to do our work, of which receiving reports about things that are not quite right, frankly, and putting it right is a wholly necessary part of every organisation’s function.
“If you shed a spotlight into that in real time, you alter the behaviour of the people in the protected space and make my job more difficult to do regulation work.”
Mr Tyrie welcomed the publication of reports, but reiterated his comments from last week that the FCA still has a lot of work to do.
peter.walker@ft.com
