The Parliamentary Treasury Committee has published its report on the appointment of chief regulator Andrew Bailey (pictured) as Governor of the Bank of England. However, it harbours 'serious concerns about the culture and operations of the Financial Conduct Authority and the industry that it regulates.'

It is satisfied that Bailey has the "professional competence and personal independence" to be appointed, and therefore unanimously approves his appointment, adding the following in its report.

"[There are] serious concerns about the culture and operations of the Financial Conduct Authority and the industry that it regulates. Dr Bailey has promised further evidence to this Committee in response to the issues raised above, which we will publish. This committee will have further opportunities to consider these issues in the immediate future, including a forthcoming pre-appointment hearing with the new CEO of the Financial Conduct Authority, as well as regular hearings with its senior management.  

"In the last Parliament our predecessor committee published a report on the perimeter of regulation and we also propose to return to that, as well as the speed and transparency with which the FCA acts, later in this year. We will also assess progress in improving the culture of the finance industry since the reports of the Parliamentary Commission on Banking Standards.

"We are clear that there is a gap between public expectations and the current powers and performance of the FCA."

Mel Stride MP, the chair of the Treasury Committee, said: “The Treasury Committee has approved Andrew Bailey’s appointment, but it has also raised a number of serious concerns regarding the performance of the FCA both before and during his time as its CEO.

“Many of these concerns – specifically around culture, transparency and insufficient speed of action – will remain a key focus for the committee.

“The Committee is clear that it has an important role in improving the performance of the FCA. We will be holding a rigorous pre-appointment hearing with the new CEO to consider further the issues raised in yesterday’s session.”

A true and fair view?

Two weeks ago, the True and Fair Campaign, led by Gina Miller and her fund-manager husband Alan, published a very critical report full of accusations of poor regulation and results for financial consumers. Their detailed critique concentrated on Andrew Bailey’s term as CEO of the FCA and was called Asleep at the wheel: an exposé of systemic regulatory failure and consumer detriment. The report scrutinises the FCA’s failure to:

• investigate a complaint by an informant against the failed HBOS Group;
• publish its own independent investigators’ report into the abusive treatment of RBS business customers;
• respond to a tipster’s warnings about London Capital & Finance, which collapsed leaving 11,600 retail customers with losses of £236 million or thereabouts;
• do a proper job of regulating a peer-to-peer firm called Lendy which collapsed, costing 9,000 investors £90 million;
• do a proper job of regulating illiquid funds, a failure that culminated in the recent suspension of the £2.5 billion M&G Property Fund;
• warn consumers of the risks in a timely way; and
• regulate the investment industry properly, thereby stopping 300,000 investors from losing more than £1 billion in the Woodford Fund.

Gina Miller, a prominent contributor to our web-pages, said: “Andrew Bailey’s tenure as CEO of the FCA has been characterised by a toxic cocktail of negligence, incompetence and indifference to the needs of investors. The report we have published makes it clear that Mr Bailey is not a fit and proper person to be the next Governor of the Bank of England. Were he to be confirmed in this highly responsible and prominent role, it would be a gross betrayal of the Government’s duty to protect consumers and a textbook example of reward for failure. Mr Bailey’s successor at the FCA must satisfy policymakers and the public they are competent and committed to protectingconsumersand to  ending  the apathetic culture within the FCA which Mr Bailey appears to have effectively institutionalised.”

The Rt Hon Sir Vince Cable added: “This report is a damning indictment of failure. As Secretary of State for Business I put forward to the FCA detailed evidence on the conflicts of interest [at] RBS during and after the financial crisis. The case studies, and others brought to light subsequently, established clear evidence of systematic and widespread mistreatment of business customers by or with the knowledge of senior management. Even after endless delays, appropriate action has not been taken by the regulator. I can also confirm that I was shown, as a minister and as an MP, the evidence of serious misconduct within the Lloyds Group, HBOS - apparently known to senior management - which was never followed up by the FCA.”

Anthony Stansfeld, a Thames Valley Police and Crime Commissioner, said: “There has been little effort or enthusiasm by many regulatory authorities, notably the Bank of England, the Serious Fraud Office (SFO) and the FCA, to either stop these frauds or bring the perpetrators to justice. These major frauds, unlike Libor and PPI, were not skimming off the top. They have ruined thousands of companies, and families and jobs. There would appear to be a systematic cover up.”

Alan Miller said: “Mr Bailey has turned the FCA into the industry’s lapdog. During the four calendar years of his tenure (2016 to 2019 inclusive), enforcement fines levied by the FCA fell by 78% compared with the preceding four calendar years. That says it all."