Sharesoc has heavily criticised the financial regulator’s plan of action for the future calling on the Financial Conduct Authority to overhaul its objectives.
This so-called “mission” was first announced by the FCA's chief executive Andrew Bailey at the regulator’s annual public meeting in July.
The regulator launched a consultation on these objectives and principles at the end of October.
But Sharesoc, an organisation representing shareholders, has lambasted the consultation, stating the mission statement reinforces concerns about the effectiveness and focus of the FCA.
The trade body branded the document “discursive”, and claimed it failed to focus on the main issues which the FCA should deal with in the future, or its past failings.
Mark Northway, the chairman of Sharesoc, said: “Our members repeatedly complain about the ineffectiveness of the FCA and their failure to enforce open, fair, and honest stock markets.”
Sharesoc’s main concerns centred on the treatment of investors, accusing the FCA of failing:
• To investigate possible breaches of the Financial Services and Markets Act, saying the regulator relies on investors to pursue expensive civil legal actions instead.
• To report the results of investigations into public companies, often issuing private warnings instead of public censures.
• To ensure there is a level playing field between institutional investors and retail investors, restricting information provided to private investors.
• To ensure fair, honest and well functioning markets, which it claimed was a particular problem in the shares of smaller companies such as those listed on Aim.
• To recognise that individual investors participate directly in capital markets, meaning there is an artificial distinction drawn between wholesale and retail markets which should not exist.
Mr Northway said in general the FCA has been too slow to respond to changes in market practices and too slow to stop abusive activities being promoted to retail investors.
He therefore said it was time for “substantial reform” of the FCA, urging the regulator to adopt a mission statement to cover the points Sharesoc made in response to the consultation.
“Their consultation document does not seem a well-focused paper that will achieve that objective."
katherine.denham@ft.com
