The FCA escaped a vote of "no confidence" during last night's debate in the House of Commons, despite facing a barrage of scathing remarks from MPs.
The Commons proposed a motion that the FCA in its current form is not fit for purpose and that MPs have no confidence in its existing structure and procedures. The FCA was on the receiving end of heavy criticism from some MPs, who suggested that the body had become "neutered" by the Treasury.
Readers of last week's blog regarding the politics of regulation will recall that the recent selection of the Bank of England Deputy Governor Andrew Bailey as CEO of the FCA marked a highly political appointment. The importance of having a regulator which is both independent and perceived to be independent did not pass unnoticed during last night's debate. The impartiality of the next appointment was one of the concerns expressed by those MPs who criticised the FCA. A Treasury veto over future FCA Chief Executive appointments and a new "arm's length independent regulator" were two of the measures called for by MPs critical of the FCA status quo.
During the debate the Treasury were accused of acting as the FCA's "big brother", leaving the rights of individuals, entrepreneurs and consumers alike at the mercy of the Bank. The FCA's investigation into the Connaught Income Series 1 Fund was the subject of specific criticism.
The Treasury's economic secretary encouraged MPs not to support a vote of "no confidence" and, despite heavy criticism of the FCA, MPs did not pass a vote of "no confidence", leaving the FCA down but not defeated. Indeed, some readers may consider that the influence of the Treasury brings some much needed balance to the regulation of UK financial services.
Last night's debate undoubtedly brings the FCA's competence as an independent, fit for purpose regulator into question again but MPs felt a vote of "no confidence" was premature. We will have to wait and see whether Andrew Bailey is able to restore confidence in the regulator.