This situation is partly due to the significant conflicts of interest resulting in revolving doors whereby senior regulators leave the FCA and emerge in highly paid jobs within firms they were regulating. The resulting culture has been one of costly, worthless consultations, thematic reviews that do not spell out any clear action, practices or recommendations, and no fundamental reforms to improve the industry’s ethics and integrity.
The UK regulator has been allowed to delegate its key responsibilities to the leading industry trade bodies which has meant numerous shoddy practises that poison the UK’s financial services industry have been allowed to continue.
Despite our research papers, exposes and practical workable solutions to improve transparency and consumer outcomes in respect of the industry’s cartel like collusion, rip off hidden fees, the UK industry epidemic of closet indexing (where funds are falsely marketed and sold), lack of fund transparency which results in consumers not being allowed to see where their money is invested, and the widespread UK conflicts of interest. The FCA is disgracefully lagging behind their regulatory counterparts in the US, European and Australia resulting in British savers being treated with total contempt and disrespect.
We sincerely hope the successor to Mr Wheatley is a person of integrity and principles, with a resolute reform agenda. We would urge them to immediately consider the following eight recommendations:
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An embargo on senior employees moves from the FCA to any FCA regulated firm within 12m of departure.
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A fresh approach to the ‘C’ in FCA to reflect ‘Consumer’ not ‘Consultation’. The FCA must undertake proper research which includes consumers, not just self-interested trade bodies.
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A visitors’ register that is publically available. This would show how often the FCA meets trade bodies and lobbyists - as is the case for politicians.
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A proper investigation with civil penalties for firms that are found to have colluded in the UK fund industry pricing cartel whereby typically 60-70% of UK funds charge an identical management fee.
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An agreement to punish rather than ignore the worst closet indexers who have mis-sold billions of funds to the British public for years; resulting in billions of pounds being unknowingly taken from savers’ money. To date not a single company or executive has been fined.
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Establish transparency of holdings - implement US style transparency which has been afforded to US savers since 2004 giving them the basic right to see their FULL holdings, on-line quarterly.
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An agreement to ensure that new innovations which the FCA appears to support are fit for purpose and will not severely disadvantage the UK consumer. Currently, we have robo-advisers who are being allowed by the FCA to produce quasi advice without any of the appropriate regulatory permissions or consumer protections. Similarly the FCA has allowed the mass public to invest in countless crowdfunding schemes based on illusory and misleading projections, as well as producing valuations that are not independent and are likely to lead to substantial future losses for ordinary investors.
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An agreement to properly implement rather than fudge the forthcoming European financial regulation – MiFid II, which is endeavouring to vastly improves consumer protection; including giving savers the right to see the TOTAL fees and charges paid by consumers in % and £.
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