FCA slammed over lack of transparency

There is “room for further progress” for the Financial Conduct Authority to become more transparent, according to the head of the body that investigates complaints into the regulator.

“Unless something is restricted by statute… then they really need to look critically, asking themselves: is there good justification for not divulging this information from a policy perspective?” Amerdeep Somal, the financial regulators’ complaints commissioner at the Office of the Complaints Commissioner , told MPs on the Treasury Committee on 15 June.

While Somal said that the FCA was “certainly getting better and was“ having more robust conversations ”with her office, there was more work to be done in making sure it was open with other regulatory agencies and the firms it oversees.

Somal cited the example of how she sent the FCA a short document — a so-called memorandum of understanding — outlining how transparency should operate between the FCA and the complaints commissioner some 12 months ago.

The regulator only responded earlier this week, Somal said, despite being chased multiple times. The complaints commissioner was told on multiple occasions that the FCA’s response was awaiting sign-off, according to Ivona Poyntz, chief operating officer at the Office of the Complaints Commissioner , who also appeared at the hearing.

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Somal said she is now working through the FCA’s response.

When asked by Treasury Committee chair Mel Stride why the regulator had not responded, Somal said: “I’m going to have that conversation when I chase them up.”

A person close to the FCA said that it is continuing to hold discussions with the commissioner, and that it can be legally prevented from disclosing confidential information under section 348 of the Financial Services and Markets Act — a fact that Somal also referenced in her comments to the Treasury Committee.

The commissioner independently reviews complaints about the UK’s financial services regulators in its oversight of the Financial Conduct Authority, the Prudential Regulation Authority, the Payment Systems Regulator, and some regulatory functions of the Bank of England.

In recent months Somal’s office upheld several embarrassing complaints against the FCA, alongside repeated issues over answering Freedom of Information Act requests on time.

Minutes of a 28 April meeting show that the FCA board “requested a plan explaining the path to compliance” on complaints and FOIA requests.

In a February report, Somal has raised “significant concerns” over how the FCA’s register of authorised firms operates in the wake of the London Capital and Finance mini-bond scandal where investors were potentially given the “wrong impression” over the firm’s licences. claimed the regulator was responsible for their losses in complaints to Somal’s office.

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Investors lost some £ 237m when LCF collapsed. Many placed their faith in the firm because it was FCA authorised, but was actually offering unregulated products. The FCA hit back at Somal’s report, however, saying that, “the register’s entry correctly reflected LCF’s permissions” at the time ”and given this, it could not agree with the commissioner’s conclusion that the register was misleading.

At the 15 June hearing, Somal said there was “more work to be done” on the register and it “remains a concern”.

“My view is it was misleading. The FCA disagrees,” she said. “So many red flags should have alerted the FCA to step in earlier.”

Somal praised the regulator at the hearing for developing a more joined-up approach between its supervision and enforcement teams in recent months, and for adding more resources to its complaints department. However, she said she had “yet to see the product” of the FCA’s increased spending on IT systems as part of its ongoing transformation project.

To contact the author of this story with feedback or news, email Justin Cash