RegulationJul 27 2016

Tyrie warns of greater FCA scrunity after audit red flags

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Tyrie warns of greater FCA scrunity after audit red flags

The Treasury Select Committee has raised concerns about the level of specialist support the Financial Conduct Authority has for those supervising the wholesale activities of retail banks.

Andrew Tyrie, the committee’s chairman, made the comments after the FCA published its latest internal audit report summaries.

Last year the regulator agreed to supply the committee with these reports after it insisted on seeing them.

Those published today relate to reports on IS maintenance, the effectiveness of the FCA’s Pillar 1 supervision of large firms, the publishing process for the FCA handbook, and health and safety.

They found that supervisors of large, complex groups in the retail banking sector did not have enough access to specialist wholesale support to effectively supervise their activities.

The report on this added that it was unclear whether wholesale specialist teams would be able to provide this support on top of their other responsibilities.

Mr Tyrie commented: “The first three years of the FCA’s life have been very difficult, to put it mildly; the regulator has been in ‘special measures’ for some time.

He continued: “The regulator’s subsequent extraordinary and incompetent briefing of the press on its plans to investigate the insurance industry reinforced concerns already held by the committee.

“Scrutiny of the internal audit reports reflects the determination of the committee, on behalf of parliament, to engage in more rigorous examination of regulators, and much more than had been the case prior to the financial crisis.”

He said the committee expects the FCA’s management to deal with the issue of specialist support.

The reports also found the firm evaluation process does not allow for effective challenge of the supervision strategies adopted across all major business activities of the largest diverse groups to ensure the supervisory strategy is appropriate.