Recommendations & Conclusions
9 items
3
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
Given that Dame Elizabeth’s report cited Megan Butler as bearing responsibility for important areas of failure and that her recruitment was conducted internally with just one alternative candidate, we understand why many will feel that “a buck that does not stop with an individual stops nowhere” when it comes to …
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Given that Dame Elizabeth’s report cited Megan Butler as bearing responsibility for important areas of failure and that her recruitment was conducted internally with just one alternative candidate, we understand why many will feel that “a buck that does not stop with an individual stops nowhere” when it comes to the personal consequences for those involved with the failings at the FCA in relation to LCF.
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Government response AI summary
The government's response explains that while the FCA is not formally under the Senior Managers Regime, it applies its principles to senior managers, resulting in bonus removals for those involved in LCF failings, although not necessarily termination of employment without personal culpability.
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HM Treasury
5
Recommendation
Fourth Report - The Financial Conduct A…
Acknowledged
We accept that a degree of shared responsibility is desirable and necessary in an organisation such as the Financial Conduct Authority. However, it is not readily justifiable for the FCA to require the firms that it regulates to adhere to the principles of the Senior Managers Regime but seemingly not …
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We accept that a degree of shared responsibility is desirable and necessary in an organisation such as the Financial Conduct Authority. However, it is not readily justifiable for the FCA to require the firms that it regulates to adhere to the principles of the Senior Managers Regime but seemingly not to apply similar principles The Financial Conduct Authority’s Regulation of London Capital & Finance plc 49 internally when there are failings of practice and culture in the organisation. The FCA Board should reflect on whether it has, in this case, met the standards which it seeks to impose upon others. We believe that there are doubts as to whether it has.
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Government response AI summary
The government described internal reviews of Supervision Hub processes and training programmes to ensure they are up-to-date and aligned with the organisation's position on unregulated activities, but did not directly address the recommendation for the FCA Board to reflect on applying Senior Managers Regime principles …
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HM Treasury
20
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
The FCA recognises that it has a statutory duty to protect customers from fraud. In the case of LCF, the regulator fell short, due to a culture that saw fraud as principally a matter for the police, and its lack of enthusiasm to look beyond the perimeter. Dame Elizabeth recommended …
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The FCA recognises that it has a statutory duty to protect customers from fraud. In the case of LCF, the regulator fell short, due to a culture that saw fraud as principally a matter for the police, and its lack of enthusiasm to look beyond the perimeter. Dame Elizabeth recommended that “the FCA should ensure that its training and culture reflect the importance of the FCA’s role in combatting fraud by authorised firms.” We note the steps the FCA has taken to address the culture of dealing with fraud, including training staff and launching another phase of its Scamsmart campaign. (Paragraph 122) The Financial Conduct Authority’s Regulation of London Capital & Finance plc 51
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Government response AI summary
The government welcomes the report, repeats its apology for LCF failures, and states it has accepted and is implementing Dame Elizabeth Gloster's recommendations, including staff training and strengthening processes, with an update already published to the Committee.
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HM Treasury
22
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
The FCA’s work to prevent fraud is done in partnership with other bodies such as the National Crime Agency and Serious Fraud Office. But the police have limited resources and personnel devoted to tackling fraud, and the FCA currently does not have the full powers of a law enforcement body.
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The FCA’s work to prevent fraud is done in partnership with other bodies such as the National Crime Agency and Serious Fraud Office. But the police have limited resources and personnel devoted to tackling fraud, and the FCA currently does not have the full powers of a law enforcement body.
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Government response AI summary
The government acknowledges the seriousness of fraud and is developing an ambitious Fraud Action Plan through the Home Office, which will consider potential legislative or regulatory changes after the 2021 Spending Review.
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HM Treasury
23
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
There may be scope for the Government to consider whether the FCA should be given more powers to enable it to investigate fraud and financial crime. We will continue to consider this as part of our Economic Crime inquiry.
Government response AI summary
The government states its serious commitment to tackling fraud through cross-government work and the Home Office's upcoming Fraud Action Plan, which will consider potential legislative or regulatory changes.
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HM Treasury
24
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
The unusual way in which LCF used mini-bonds and the high level of risk associated with any such investments highlight the need for the Treasury’s intervention. We welcome the Treasury’s ongoing consultation on the regulation of non-transferable debt securities but note the delay in its launch.
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The unusual way in which LCF used mini-bonds and the high level of risk associated with any such investments highlight the need for the Treasury’s intervention. We welcome the Treasury’s ongoing consultation on the regulation of non-transferable debt securities but note the delay in its launch.
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Government response AI summary
The Treasury confirmed that its consultation on non-transferable debt securities (NTDS) has closed and it aims to publish its response and introduce legislation in the autumn.
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HM Treasury
26
Recommendation
Fourth Report - The Financial Conduct A…
Acknowledged
The FCA should consider how it can improve its customer information so as to help equip customers with the ability to deal with the important financial decisions that they will have to take, and the risks that are attached to those decisions.
Government response AI summary
The government acknowledges the need to improve consumer support for financial decisions, stating it is engaged in ongoing work with stakeholders to address regulatory barriers and develop varied services, including engagement with MaPS.
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HM Treasury
27
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
The collapse of LCF brought about a huge degree of uncertainty for bondholders, some of whom were faced with an anxious wait for the publication of Dame Elizabeth’s report and further details of the Government’s compensation scheme. We welcome the approach that the Treasury has taken to compensate LCF bondholders, …
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The collapse of LCF brought about a huge degree of uncertainty for bondholders, some of whom were faced with an anxious wait for the publication of Dame Elizabeth’s report and further details of the Government’s compensation scheme. We welcome the approach that the Treasury has taken to compensate LCF bondholders, a scheme that we believe will provide substantial assistance to a very large proportion of those who have lost out and who have not qualified under other forms of compensation available. The Government has taken a reasonable approach in striking the balance between consumer responsibility for their investment decisions and recognising the FCA’s failure to discharge its functions in respect of LCF such that it fulfilled its statutory objectives. We support the principle of the Bill to provide compensation to LCF bondholders.
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Government response AI summary
The government acknowledged the Committee's support for the LCF compensation scheme, detailing that the Treasury is progressing work with the FSCS, who aims to pay eligible bondholders within 6 months of Royal Assent.
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HM Treasury
36
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
We note the Government’s intention to consider additional legislative and non- legislative solutions to tackle fraud via advertising, emails or cloned websites, including the online advertising programme, but we believe quicker action is required to protect consumers and help the FCA address the issue adequately.
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We note the Government’s intention to consider additional legislative and non- legislative solutions to tackle fraud via advertising, emails or cloned websites, including the online advertising programme, but we believe quicker action is required to protect consumers and help the FCA address the issue adequately.
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Government response AI summary
The government response details multiple initiatives to tackle online fraud, including the inclusion of fraud in the Online Safety Bill, upcoming DCMS consultation on online advertising, FCA action on financial promotions, and the Home Office developing a Fraud Action Plan to be published after the …
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HM Treasury