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The FCA – a watchdog too nice and chummy to bark or bite | Business



obody fears the Financial Conduct Authority. Nobody fears its genius boss, Andrew Bailey. Not really. Or at least not enough to worry about doing jail time or even being banned from working in the City if they do something wrong.

The FCA might be the main regulator of the financial services industry on behalf of Britain's fixed army of consumers. It might have a wide range of powers to bring financial services to companies when rip off individuals. Yet it appears to be a creature of the establishment, no one can join the Treasury and the Bank of England in the industry when questions arise about the bad behavior of companies flogging financial products.

Bailey is ex-Bank of England and the relatively new FCA chair, Charles Randell, spent most of his career in the city as a lawyer, laughingly helping piece together the battered banks he now regulates

So it's no wonder Bailey used his time before MPs on the Treasury select committee to explain why it was that his organization could do much about one claim of wrongdoing after another.

A case in point was the well-documented efforts of staff at Royal Bank of Scotland to suck dry many of the small businesses caught up in its Global Restructuring Group. Their activities lay outside the FCA's remit. It wasn't regulate small business customers. And anyway, there was no evidence of quite fraudulent fraud, even though many of the victims were systematic wrongdoing to the bank's top brass, which included Nathan Bostock, who oversaw GRG and now runs Santander UK.

The Labor MP Rushanara Ali asked if Bailey was too nice to bankers. He disagreed and then interestingly Randell leapt to his defense, the FCA's warning committee was coming under even greater strain. With 60,000 firms, 3,200 funds and 1

50,000 approved persons to regulate, the job is immense, he said.

Bailey added that the dramatic changes of the way we all save, especially for retirement, played a part. No longer are we looked after by our employers and the insurance industry, which in previous years took on the risks of falling investment returns and increasing life expectancy.

In the switch to self-invested personal pensions (Sipps) and other forms of direct investment, which place the onus on savers to understand the market and risk they are taking, are likely to proliferate.

He had the mind of the fund manager Neil Woodford, who manages more than $ 3bn (£ 2.3bn) in an equity income fund that is now frozen due to the fact that investors are seeking to move their money elsewhere. Bailey looked farorn when he said Woodford had broken the spirit and not the letter of the FCA's rules in the way he moved shares around to avoid a regulatory clampdown. If only the regulator could police the city's ethics with a set of principles rather than a code. Then he might catch out wrongdoers.

Bailey, though, doesn't display any urgency or passion for punishing wrongdoers. Woodford and the financial advice industry have suffered millions of pounds in fees while knowing the fund was suffering. If Bailey is disgusted by the way the industry behaves, say so, and say so loudly.

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Big pharma, big pay package





 A woman has a botox injection



Botox maker Allergan is now owned by AbbVie. Photograph: Jacquelyn Martin / AP

Big is beautiful in the US healthcare industry and it's not just about bigger budgets to find new drugs. The latest takeover involves Chicago-based AbbVie, which is a member of Richard Gonzalez. The chairman and chief executive, who has a bonus directly from sales of the firm's bestselling drug, will run the new business once. Abbie has swallowed Allergan, the Irish-based maker of Botox.

At the moment Gonzalez makes $ 20.8m (£ 16.3m a year. That figure is likely to rise after the $ 63bn deal goes through. Not least because Brenton Saunders, the boss of Allergan, will also join the new board, bringing his $ 32.8ma year remuneration package with him.

Earlier this year Giovanni Caforio hit a deal as the boss of Bristol-Myers Squibb, the US drug maker, to buy rival Celgene for $ 90bn. Caforio was paid $ 19.4m a year. And the list goes on.

Gonzalez was grilled in Congress at about his bonus scheme and whether it provided an incentive to keep drug prices high. The answer was obvious and only goes to support the claim that health businesses in the US are run as cash machines for executives.


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