A staunch critic of the UK regulator’s approach to Mifid II has called on Financial Conduct Authority boss Andrew Bailey to resign if he is not willing to enforce the fee disclosure regulation.
Bailey told MPs at a Treasury select committee hearing this month that the UK regulator is yet to take enforcement action against any investment firm over Mifid II breaches.
High cost of hidden charges
Gina Miller, co-founder of wealth manager SCM Direct, said the FCA is failing in its statutory strategic objective to ensure markets function well. It is also failing to ensure consumer protection, integrity and competition, part of its operational objectives.
She is particularly concerned about Article 24, which requires companies to disclose 100% of their costs and charges to consumers. Hidden charges are costing UK investors £903m ($1.16bn, €1bn) per year, according to SCM Direct calculations.
“The buck has to stop somewhere and I suggest it is at Mr Bailey’s door,” she said. “Culture comes from the top, and the FCA’s culture under Mr Bailey appears to be capitulation to the very industry it is meant to regulate. It is time for him to ensure the FCA properly regulates the UK investment industry, or else resign.”
This is not the first time Miller has targeted Bailey and the FCA, having called on the Treasury to look into the regulator’s Mifid II failings in October.
In July, she took the financial watchdog to task over its lack of response to a freedom of information request she submitted in May.
Miller is best known for challenging the authority of the British government to invoke article 50 and trigger Brexit without first holding a vote in parliament.
Supervisory focus
Bailey told Treasury select committee chair Nicky Morgan at a public hearing on Thursday that there had been no enforcement actions against firms over Mifid II breaches. “We have been focused on supervisory action.”
In Q1 2019, the FCA will be publishing findings on how firms calculate and disclose transaction costs and how effective overall cost disclosures are.
In response to Miller’s comments, an FCA spokesperson said: “As yet, no firm has been referred to enforcement for a breach of the relevant rules. We are focused on supervisory action and have conducted a substantial amount of work in this area, including to understand and clarify our requirements and how effectively they have been implemented.
“Where necessary, we have already sought improvements.”
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