The APPG on Investment Fraud and Fairer Financial Services has tabled an
Early Day Motion (EDM) today, that recognises the financial and emotional
hardship experienced by vulnerable, elderly building society customers and
their families, through being introduced by building societies which they
trusted to firms offering unregulated wills and trusts.
It goes on to explain how victims have lost large portions of their estates, and the
widespread concern that the Financial Conduct Authority (FCA) has failed to act against
the building societies despite many FCA Principles for Business being breached.
The Parliamentarians are calling for the FCA to compel the building societies to fully
compensate the victims and for the Government to ensure that similar injustices do not
happen in the future.
Bob Blackman CBE MP, Co-Chair of the APPG stated that:
“The Building Societies Scandal is a matter the APPG has been working on for over two
years. It is fair to say that we are not at all happy that the FCA has failed to take swift and
decisive corrective action, despite a mountain of evidence the APPG gathered from victims
and provided to the FCA that showed many FCA Principles had been breached and therefore
that it has the basis to compel the Building Societies to compensate the victims.
The Early Day Motion places on record our dissatisfaction with the situation – the APPG will
continue to act in the interests of the elderly and vulnerable victims – they just haven’t been
treated correctly, it’s as simple as that.”
Emma Lewell-Buck, the APPG member who initiated the EDM added:
“People in South Shields and across the country poured their hard-earned life savings into
schemes promoted by building societies they trusted, only to lose large portions of their
estates. It’s outrageous that the building societies involved in this scandal did not provide
adequate due diligence before recommending unregulated third parties, without warning
customers of the risks.
This is yet another scandal where nobody is taking responsibility, not the building societies
themselves or the Financial Conduct Authority with their responsibility to protect customers.
I will continue to fight for victims who simply cannot wait years for a resolution and
compensation.”
Andrea Hindley, a spokesperson for the Philips Trust Action Group explained:
“We attended the AGMS of some of the Building Societies recently and heard harrowing
accounts of how vulnerable, elderly people’s lives have been ruined by the reckless
introductions made. At Philips Trust Action Group (PTAG), we hear these accounts from our
members on a daily basis. I’m not exaggerating when I state people are moved to tears at
what they hear. The Building Societies have been aware of this problem, a problem they
initiated, for several years and neither they nor the regulator in charge of their behaviour are
looking after the hundreds of elderly people whose lives have been turned upside down,
through no fault of their own.
This might have to end up in the courts, but it shouldn’t have to be that way, not when the
FCA could and should step in to sort out this mess – as customers or members of a financial
institution we are reassured that that is their role – why are they not protecting our
interests? – especially when it is now known that a credible whistleblower gave them all the
info they needed to close down the scandal four years ago. They themselves were aware of
issues as early as 2018, when they initiated an intervention regarding investment decisions.
Why did they stop? This looks like a dereliction of duty.”
……………….
Further information:
Contact Andy Agathangelou, Chair, Secretariat Committee to the All-Party
Parliamentary Group on Investment Fraud and Fairer Financial Services:
andy.agathangelou@transparencytaskforce.org; +44 7501 460308
The publicity photos of the Parliamentarians mentioned are available below:
Bob Blackman CBE MP: https://members.parliament.uk/member/4005/portrait
Emma Lewell-Buck MP: https://members.parliament.uk/member/4277/portrait
About Early Day Motions:
Early Day Motions (EDMs) are motions submitted for debate in the House of Commons for
which no day has been fixed. Many attract a great deal of public interest and media
coverage. EDMs are used to record the views of individual MPs or to draw attention to
specific events or campaigns.
This EDM was tabled on 29 April by Emma Lewell-Buck MP, its Primary Sponsor. Now that it
has been tabled the process of raising awareness of it amongst MPs can now begin,
generating other MPs as sponsors and supporters who are keen to show their support.
About APPGs:
An All Party Parliamentary Group (APPG) is cross-party, with a minimum number of
parliamentarians from the Government and the official opposition, and cross-house, made
up of both peers and MPs.
The Purpose Statement of the APPG:
“To advocate for the victims of financial misconduct, crimes, scandals, frauds and regulatory
failures, by driving positive, progressive, and purposeful reforms that achieve a fair, trusted
and just system, where the service providers, regulators and government agencies provide
appropriate protection and deliver good outcomes, including redress for historical wrongs.”
End.
Its principal concern about the Warning Notice is that the criticisms of WIM and Neil
Woodford appear to be focused on the narrow issue of the mismanagement of the
liquidity of the Woodford Equity Income Fund (‘WEIF’). There is little, if any, reference to
the much broader and, for his customers, financially more damaging alleged misconduct,
namely that of the misallocation of client monies.
WEIF was a retail equity income fund, marketed to mainstream, ‘Middle England’ investors.
It should have invested in vanilla, dividend-paying, listed companies, not cash-consuming
‘moonshot’ start-ups and early-stage businesses, the founders and investors in many of
which were, it is alleged, associates of Mr Woodford. The lion’s share of investors’ losses
flowed from the fund manager’s decision to allocate much of their money to high-risk
investments that they believe had no place in the Fund. They deserve compensation for
these losses.
The APPG is also concerned that the Warning Notice contains no indication of the amount of
redress – if any – that the FCA is seeking from WIM and Neil Woodford. We ask that the FCA
publishes this information at the earliest opportunity. If, as we fear, that sum is grossly
inadequate, it is surely preferable that it be challenged now, because it will be too late to do
so once the FCA has formalised its claims before the Regulatory Decisions Committee and, if
necessary, the Upper Tribunal. If the alleged wrongdoers are allowed to see and challenge
the regulator’s proposed remedies, their victims should surely be afforded the same rights.
Bob Blackman CBE MP, Co-Chair of the APPG commented:
“There have been serious concerns about the performance of the FCA in relation to
its handling of the Woodford Scandal, including the length of time it is taking to
conclude matters.
“This latest development is merely one of many issues that have caused
Parliamentarians and Woodford victims to be concerned about whether the FCA is
willing and able to provide an appropriate degree of consumer protection, as tasked
by Parliament to do so.
“The general pattern the APPG has seen, in this and several other alleged regulatory
failure cases, is that the FCA does too little, too late, and is far too opaque.”
Further information:
contact Andy Agathangelou, Chair, Secretariat Committee to the
All-Party Parliamentary Group on Investment Fraud and Fairer Financial Services:
andy.agathangelou@transparencytaskforce.org; +44 7501 460308
The publicity photo of the Parliamentarian mentioned is available below:
Bob Blackman CBE MP: https://members.parliament.uk/member/4005/portrait
End.
Peter Gibson, Member of Parliament for Darlington and Chair of the APPG on Personal Banking and Fairer Financial Services, believes the time is right to give employees past and present of the Financial Conduct Authority a chance to share their opinion about the regulator.
“When we announced the Call for Evidence in July, we said that our Group’s Purpose Statement includes an undertaking to ‘identify aspects of personal banking and financial services where the service providers or regulators have not delivered, or are not delivering, excellence and appropriate consumer protection’ and a commitment to ‘encourage all stakeholders to work together to resolve past and present shortcomings, and to bring about positive changes.’
“Clearly, the views of those who work or have worked at the FCA are highly pertinent to the work of our Group as a whole, and to the Call for Evidence. We were recently approached by a representative of this stakeholder group and asked to consider creating a bespoke question set tailored to their expertise and interests, which we have now done.
“We are alert to the need to handle their responses with particular sensitivity and have provided enhanced assurances about confidentiality where requested and have also arranged specialist support from Whistleblowers UK for any respondents who may be considering making protected disclosures.
“Our Call for Evidence is a positive, progressive and purposeful initiative. The overall objective is to improve our understanding of how the FCA is perceived. If the evidence we gather indicates there are problem areas, we can explore those issues further, with a view to proposing Evidence-Based remedies. Ultimately therefore, this initiative may lead to fresh policy thinking and reform, for the benefit for all, including of course the FCA itself.
The more responses we have, the more meaningful the analysis will be, so it would be good for all interested stakeholders to not just participate in the exercise but to also help raise awareness of it. As at the end of August, we had already received 85 responses, from victims of financial services scams and misconduct, SME owners alleging mistreatment by banks, mortgage prisoners, whistleblowers and other significant stakeholders. We hope that word will spread among those who work or have worked at the FCA about this initiative and that they will be similarly forthcoming with their feedback about the regulator.”
To provide time for this feedback, the closing date for responses to the Call for Evidence has been extended to 11 October. Further information can be found here.
Peter Gibson, Member of Parliament for Darlington and Chair of the APPG on Personal Banking and Fairer Financial Services, believes the time is right to give the public a chance to share their opinion about the Financial Conduct Authority.
He says:
“The Purpose Statement of the APPG on Personal Banking and Fairer Financial Services is:
“To identify aspects of personal banking and financial services where the service providers or regulators have not delivered, or are not delivering, excellence and appropriate consumer protection; to facilitate and encourage all stakeholders to work together to resolve past and present shortcomings, and to bring about positive changes.”
In an attempt to better understand whether the financial regulators “…have not delivered, or are not delivering, excellence and appropriate consumer protection…” we are gathering evidence on what people think about the Financial Conduct Authority.
We have developed several sets of questions, each designed to fit a particular context depending on the individual’s circumstances. For example, there’s a question set for scam victims, another for whistleblowers, and another for people that have suffered as a result of poor conduct by the banks. There are six question sets in total.
We may consider running a similar exercise about other financial regulators in due course, but for now, it is just the FCA that is in scope in this particular Call for Evidence – we only want to gather opinions from people that have interacted with the FCA.
Our Call for Evidence is a positive, progressive and purposeful initiative. The overall objective is to improve our understanding of how the FCA is perceived. If the evidence we gather indicates there are problem areas, we can explore those issues further, with a view to proposing Evidence-Based remedies. Ultimately therefore, this initiative may lead to fresh policy thinking and reform, for the benefit for all, including of course the FCA itself.
The more responses we have, the more meaningful the analysis will be, so it would be good for all interested stakeholders to not just participate in the exercise but to also help raise awareness of it.
Further details about this important initiative, can be found on our website at this web page:
https://www.appgifffs.org/call-for-evidence-about-the-fca ”
Ends.
Notes to Editors:
- For a full list of the Parliamentarians involved in the APPG see here.
- The operation of the Call for Evidence will be handled by the APPG’s Secretariat.
- The APPG’s Purpose Statement is:
“To identify aspects of personal banking and financial services where the service providers or regulators have not delivered, or are not delivering, excellence and appropriate consumer protection; to facilitate and encourage all stakeholders to work together to resolve past and present shortcomings, and to bring about positive changes.”
- The initial point of contact regarding the APPG on Personal Banking and Fairer Financial Services is the Char of its Secretariat, Andy Agathangelou, who can be reached here.
Peter Gibson, Member of Parliament for Darlington and Chair of the APPG on Personal Banking and Fairer Financial Services believes the Blackmore Bond scandal provides further irrefutable evidence that the FCA is failing to regulate effectively.
Gibson states:
“Parliament has given the Financial Conduct Authority clear statutory objectives which include protecting consumers from harm but there is mounting evidence that the regulator is consistently failing to deliver.
It is obvious that the FCA is not for purpose. The real issue now is whether Parliament can get it to perform satisfactorily through transformational reform; or whether its issues are so deep-rooted that a more brutal approach is necessary. I hope it’s the former rather than the latter but one way or another we simply cannot tolerate a regulator that seems unable to score even when presented with an open goal.
The Purpose Statement for the APPG that I lead is:
‘To identify aspects of personal banking and financial services where the service providers or regulators have not delivered, or are not delivering, excellence and appropriate consumer protection; to facilitate and encourage all stakeholders to work together to resolve past and present shortcomings, and to bring about positive changes.’
The next step on Blackmore is simple – we need a swift independent report by Dame Gloster or somebody equally robust to investigate exactly what went wrong.
Meanwhile, it remains of systemic importance, particularly post-Brexit, that we can have confidence in those responsible for regulating our strategically-important financial sector.
Therefore, Parliament must gear up as necessary to scrutinise more closely the work that the FCA is doing because it is crystal clear that it is not functioning as Parliament wishes.”
Peter Gibson, Member of Parliament for Darlington and Chair of the newly-formed APPG on Personal Banking and Fairer Financial Services believes the two reports about the FCA that were published last week provide irrefutable evidence that the FCA is failing to regulate effectively.
The first of the two highly scathing independent reports, by Dame Elizabeth Gloster into the collapse of LCF concluded the FCA failed to properly regulate LCF and suggested the watchdog may have contributed to losses by dropping the ball so badly.
The second damning report by Raj Parker into Connaught is equally troubling, showing the FCA’s failure to respond adequately to tip-offs over the years — including concerns from a fellow financial regulator, and the CEO of the bridging loan company involved.
Gibson states:
“Parliament has given the FCA clear statutory objectives which include protecting consumers from harm. It’s all well and good having an apology from the FCA’s current Chair, Charles Randell and the former Chief Executive, Andrew Bailey for what the FCA has done, or more accurately for what it has failed to do; but what we actually need is timely and targeted transformation aimed at ensuring we have a conduct regulator that works – it’s obvious to all observers that we don’t yet have that.
The reports show that there are many serious and interconnected problems that continue to dog the FCA including weak governance, insufficient expertise, ineffective leadership and perhaps most worrying of all a culture at the top of dismissiveness, denial and delay.
The fact that a very recent decision by Chief Executive Nikhil Rathi to appoint one of the individuals responsible for what has happened, Megan Butler, to be in charge of transformation shows that the FCA’s senior leadership still does not grasp the nature of the problem.
The Purpose Statement for the newly-formed APPG that I lead is:
‘To identify aspects of personal banking and financial services where the service providers or regulators have not delivered, or are not delivering, excellence and appropriate consumer protection; to facilitate and encourage all stakeholders to work together to resolve past and present shortcomings, and to bring about positive changes.’
The situation is very simple – Parliamentarians and the public at large expect the FCA to regulate effectively; but there can be no doubt it is failing. Back in February 2016 there was an important debate in parliament about the future of the FCA; the question to be debated now is not whether the regulator is unfit for purpose but, rather, ‘What’s it going to take to get the FCA fit for purpose?’
I will be liaising with all the relevant Parliamentary bodies and many Parliamentary colleagues over the coming weeks to ensure an appropriate inquiry is organised that ensures all stakeholders are spoken to, including the authors of the two reports, those responsible for the FCA’s poor performance and groups representing consumers that have been harmed, to ensure the current crisis in confidence about the FCA’s capability is turned into something positive and truly transformational.
It is of systemic importance, particularly post-Brexit, that the UK can have confidence in those responsible for regulating our strategically-important financial sector.
Nothing should be off the table at this point, especially as the reports show that had the FCA acted properly on the intelligence it was given, the LCF, Connaught and even the Woodford scandals need not have happened at all.”
Kevin Hollinrake MP, a member of Peter Gibson’s APPG on Personal Banking and Fairer Financial Services; and also Co-Chair of the APPG on Fair Business Banking is equally convinced of the need for an inquiry.
He comments:
“I’ve had many reasons to question the competence of the FCA’s leadership over recent years on a range of matters that have caused great public detriment, particularly to people running businesses. The conclusions that Dame Gloster and Raj Parker have expressed in their highly critical reports should be shocking to me. Unfortunately however, they are merely in keeping with the conclusions I have come to over a significant period of time – that there is something seriously wrong with the FCA”.
Another APPG member is taking the opportunity to speak out, feeling strongly about the issue and recognising the importance of the FCA having sufficient integrity for the public to have confidence in it. Paul Howell MP says:
“The FCA should be a foundation of financial integrity and for it to find itself on the wrong end of reports like these undermines public confidence. It is imperative that this is investigated fully and integrity restored”.
Ends.
Notes to Editors:
- For a full list of the Parliamentarians involved in the APPG see here.
- For a full list of the APPG’s Secretariat Committee members see here.
- The APPG’s Purpose Statement is:
“To identify aspects of personal banking and financial services where the service providers or regulators have not delivered, or are not delivering, excellence and appropriate consumer protection; to facilitate and encourage all stakeholders to work together to resolve past and present shortcomings, and to bring about positive changes.”
- The initial point of contact regarding the APPG on Personal Banking and Fairer Financial Services is the Char of its Secretariat, Andy Agathangelou, who can be reached through andy.agathangelou@transparencytaskforce.org
MPs call for debate on making FCA fit for purpose – see full article here
MPs call for inquiry into effectiveness of FCA – see full article here