A law firm has questioned why a critical review of the Financial Conduct Authority was buried among almost 50 others.
Last Thursday the FCA published Boardroom Review Limited’s report, entitled Review of Board Effectiveness, which detailed several strengths of the board – a collaborative culture, high-quality information and a focus on the right issues.
However, the report also highlighted many challenges – the management of stakeholders, board composition planning, maintaining the effectiveness of internal audit, the focus on resource allocation, attention to corporate culture, executive development and succession.
In terms of stakeholder management, the report stated that although the FCA is constituted as an independent regulator, its remit is defined by government, which has a “significant impact” on the role and influence of its board.
The report stated: “External interventions which can put pressure on the chairman, and/or bypass the chairman and the board entirely, can have dramatic effects on the organisation.
“All directors are aware that the political landscape is particularly difficult to manage. Recent interventions by HM Treasury and other bodies have raised questions from directors regarding the board’s independence.”
Alison Loveday, managing partner at law firm Berg, took issue with the timing of the review’s publication, as well as the fact that it was buried among almost 50 other documents published at the same time. She also expressed concern at the make-up of the board.
Ms Loveday pointed out “the numbers of people having to stand themselves down due to conflicts of interest, moving between consultancy, regulation and government.
She added: “At a minimum, the FCA needs to be more transparent. It is difficult to take the banks to task, what with their lobbying power and influence from the Treasury, but at least they could accept this is the case and make moves to counter the influence.”
The review’s report mentioned that recent interventions – such as the Davis report into a botched thematic review pre-briefing – and levels of public criticism have impaired culture and morale at the FCA, influencing executive caution, levels of defensiveness and the willingness to escalate issues and learn from mistakes, as well as attracting and retaining talent.
It identified that chief executive leadership is important, so the board should understand how Martin Wheatley’s replacement intends to model new attitudes, communicate corporate values and develop the FCA’s internal culture.
Historically the board has not had good insight into human resources or executive development planning, stated the report.