The All-Party Parliamentary Group (APPG) on Investment Fraud and Fairer Financial Services has called for parliament to “reclaim its role in financial regulation”.
In a report published today (16 March) the group said the UK’s system of financial conduct regulation is in urgent need of fundamental structural reform and pressed Parliament to undertake a review of the UK’s financial conduct regulatory architecture.
Across 21,625 individual ratings of regulatory performance in the report, 83% said they ‘strongly agree” with statements that were critical of the Financial Conduct Authority’s performance.
The APPG noted that the government is currently pursuing policies aimed at reducing regulatory burdens to stimulate economic growth, but argued that weakening consumer protections risks: increasing financial scandals; damaging the reputation of the UK’s financial sector; reducing public participation in financial markets; and deepening the trust deficit between consumers and financial institutions.
The cohort is calling for a Royal Commission into UK financial conduct regulation to undertake a comprehensive review of the regulatory architecture, define clearly what fairness in financial services should mean, examine how responsibility should be shared between Parliament, regulators, ombudsmen and the courts, and consider reforms to ensure regulators are properly accountable to democratic institutions.
John McDonnell MP, chair, said: “This report brings together one of the most comprehensive bodies of evidence ever assembled on the failures of financial conduct regulation in the United Kingdom.
“The evidence presented here makes the case for a Royal Commission, or something similar, that can undertake a genuine root-and-branch review of financial regulation.
“Parliament must reclaim its role in defining what fairness means in financial services and ensure that the institutions responsible for protecting consumers are not just capable of delivering it, but are also motivated to do so in an unconflicted manner.”
