RegulationSep 28 2022

Woodford activists call for consumer-led oversight of FCA

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Woodford activists call for consumer-led oversight of FCA

The financial services and markets bill presents a once in a generation opportunity to reset UK financial services and should include the creation of a consumer-led oversight body, the Transparency Taskforce has said.

Mark Bishop, head of the Woodford Campaign Group at the TTF, said consumers’ voices are seldom heard in the governance of the FCA.

“The FCA’s operational objectives have to do with consumer protection, making sure there’s competition and ensuring there is market integrity,” he told a webinar yesterday (September 27).

The taskforce argued for a consumer-led oversight body to be created, which would have a number of responsibilities.

“These include hiring and firing, jointly with the Treasury, the FCA’s chair and chief executive,” Bishop said.

The body would also appoint two FCA non-executive directors, the taskforce said, as well as the director of the Financial Ombudsman Service, and the members and chair of the consumer panel

“These are all appointed by the FCA, so there are conflicts of interest there,” Bishop said.

The body would appoint the complaints commissioner, currently appointed by the Treasury, which also appoints the FCA's CEO and chair.

Finally, it would carry out an annual review of the FCA and the regulatory regime, and periodically carry out a review of how the FCA treats whistleblowers.

“Nobody is doing that currently,” Bishop said.

“If [these measures] had been put in place before, maybe [Woodford] wouldn’t have happened,” he added.

The claims were made on a call organised by the taskforce as an update on the Woodford saga, and come at a time when the FCA is under scrutiny after prime minister Liz Truss said in her leadership campaign that she would launch a review of the roles and responsibilities of the regulator once in office.

It could see the Financial Conduct Authority, the Prudential Regulation Authority and the Payments Systems Regulator rolled into one new body.

The FCA has come under fire for its handling of the Woodford fund’s collapse, including by MPs who earlier this year urged the regulator’s chief executive to conclude its investigation into the scandal as soon as possible.

FCA CEO Nikhil Rathi had previously said he was confident the investigative work would be completed at the end of last year, however the FCA has only recently outlined the potential punishment for the fund’s authorised corporate director, Link Fund Solutions, which will be fined and asked to pay redress or appeal the decision.

The FCA has come under fire for its handling of other issues, such its oversight of London Capital and Finance, which was called “one of the largest conduct regulatory failures in decades”.

LCF was regulated by the FCA, but certain investments it provided were not, and it was claimed that this led to investors getting the "wrong impression" about what was regulated and what was not, leading them to believe LCF was a reputable firm and their products were regulated.

A long-awaited report into the scandal was published by former judge Dame Gloster, and said victims of the scandal were "entitled to expect, and receive, more protection."

sally.hickey@ft.com