Britain’s Financial Conduct Authority Must Act Faster: National Auditor Report

Britain’s Financial Conduct Authority (FCA) can take too long to act and a sweeping post-Brexit internal revamp to make it nimbler will take years to complete, the National Audit Office (NAO) said in a report on Friday.

The FCA regulates about 50,000 banks, insurers, asset managers and other firms in finance, a sector worth 173.6 billion pounds ($218.2 billion) for the UK economy in 2021.

The watchdog has spent 317 million pounds so far on a big internal revamp and hiring drive as it adapts to a more powerful, post-Brexit role, and applies lessons from the collapse of London Capital & Finance and liquidation of the Connaught Income fund.

FCA CEO Nikhil Rathi has said the watchdog’s revamp is making it more data-driven, nimble and willing to intervene.

The NAO, which checks whether government and its agencies deliver value for taxpayers, studied how well the FCA is implementing internal changes, concluding that it needs to move faster if it is to fight financial crime and fraud effectively.

“The NAO found that there can be a significant delay between the FCA identifying an issue and it taking action,” its report said, citing examples of delays in taking action against illegal crypto firms, or having too few specialist staff for the job.

By autumn 2024, the FCA should make sure it has the internal processes needed to manage the scale of change it faces, and a plan to provide greater clarity about measuring its performance, which is hard to judge currently, the NAO said.

“It should also build on current work in developing a long-term workforce plan to ensure it maintains the necessary expertise.”

The FCA said the NAO recognizes the significant work it has undertaken to make itself fit for the future.

“We are committed to achieving the helpful recommendations as we continue to adapt to the changing and rapidly digitalising financial services landscape and progress the future regulatory framework, following the UK’s departure from the European Union,” an FCA spokesperson said.

($1 = 0.7945 pounds)

(Reporting by Huw Jones; editing by Mark Potter)