The Financial Conduct Authority is expected to face criticism on Monday when MPs debate a motion on whether it is up to the job of regulating behaviour in the City.
The debate, tabled by Conservative MP Guto Bebb, will discuss “that this House believes that the Financial Conduct Authority in its current form is not fit for purpose; and has no confidence in its existing structure and procedures”.
Speaking ahead of the debate, Bebb, who has campaigned for better treatment for small business, said he was motivated to table the debate after the FCA pulled its review into banking culture at the end of last year.
“Anybody who knows banks will find it impossible to say that bank behaviour was (not) motivated by financial inducement,” the MP for Aberconwy said.
“We need to have a proper debate about what is going on with the FCA, how independent are they,” said Bebb.
The decision by the FCA to abandon a review into the culture of banks sparked a series of accusations that the Treasury had intervened – strongly denied by both the regulator and the Treasury – as part of a softer approach to the City.
The motion will be heard just days after the chancellor, George Osborne, stunned the City by naming Andrew Bailey, a deputy governor of the Bank of England and the head of the Prudential Regulation Authority, as the chief executive of the FCA.
Labour MP John Mann is co-sponsoring the motion and said he has no confidence in the regulator. “It is not fit for purpose,” said Mann, who sits on the Treasury select committee. He is concerned the FCA’s focus is shifting from so-called conduct issues to prudential regulation.
“On Monday I will reveal in the House of Commons a new scandal which the FCA is trying to sweep under the carpet, providing further proof that we need a strong, independent regulator, not another lackey for George Osborne and the banks,” said
Mann is expected to accuse the FCA of failing to regulate foreign exchange firms tightly enough, to ensure they don’t offer misleading exchange rates to consumers.
The FCA has only been in existence since April 2013 when the coalition government disbanded the-then City regulator, the Financial Services Authority. The FCA was given responsibility for overseeing the behaviour of the City and the PRA, inside the Bank of England, was charged with regulating whether banks and insurance companies were strong enough to withstand market turbulence.
The FCA and the Treasury declined to comment ahead of the debate. When Bailey was appointed, Osborne had said his appointment was “an important next step in the establishment of the FCA as a strong regulator, independent of government and industry”.
This article was written by Jill Treanor and Julia Kollewe, for theguardian.com on Sunday 31st January 2016 15.27 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010