MARRIOTT LAMENTATIONS 236: "UK financial sector watchdog receives intense criticism; 'incompetent at best, dishonest at worst' - a global problem

FCA report: The UK's 'Financial Conduct Authority' (FCA) has been blasted in a damning 358 page report which took three years to compile

The financial sector watchdog is described as “incompetent at best, dishonest at worst”. Evidence provided by whistleblowers and current and former employees of the regulator showed "there are very significant shortcomings to the FCA", depicting its "culture and leadership as profoundly defective”, from the top down

These views are "particularly strongly held in relation to its consumer protection remit, where criticisms abound that it is slow to spot and identify fraud and other misconduct, its responses to such wrongdoing are slow and inadequate, and it is insufficiently assertive in securing redress for consumers and penalising perpetrators.”

The report was commissioned and "carried out by the all-party parliamentary group on investment fraud and fairer financial services, a group of 30 MPs and a dozen members of the House of Lords" the Guardian reports

Following a series of scandals, financial services firms had been accused of mistreating consumers and small businesses. The FCA is blamed for “doing too little too late – or nothing” to prevent, investigate or punish alleged wrongdoing. The report highlights the FCA’s alarming treatment of whistleblowers and their evidence, adding that the organisation did not act properly on intelligence provided, that it failed to investigate 'tips', or to protect those who offered information. The report notes “tragic tales of regulatory failure causing enormous financial and emotional distress”

“The picture painted is not pretty. The FCA is seen as incompetent at best, dishonest at worst. Its actions are slow and inadequate, its leaders opaque and unaccountable” the report concluded

Employees talk of an "increasingly toxic" culture which is said to have "got worse rather than better in recent years, in which errors and inaction are too common, where there is little accountability, and those who challenge a top-down ‘official line’ on any given issue are bullied and discriminated against, or even managed out”. That's a fair description of the culture at many of the corporations regulatory bodies are tasked to oversee. It must be catching!

One reported that complaints about aggressive and “macho” behaviour by senior staff were brushed aside. Another said it was “the worst staff culture I have ever experienced in nearly 40 years. Top-down hierarchical management, do as you’re told, don’t argue. An astonishing arrogance that FCA ‘insiders’ know more than any newcomers.”

Not unexpectedly, an FCA spokesperson rejected the report's "categorisation of the organisation". Institutions always do. "We have learned from historic issues and transformed as an organisation so we can deliver for consumers, the market and the wider economy.” Delusional corporate-speak through and through. Total denial. Zero accountability

A global issue: An official pointed out that “financial crime is a massive problem in the UK”. It is the world over. Might that be because, for whatever reason, the issue is not treated with the urgency it deserves? Or might regulatory capture be more rife than ever previously imagined? Watchdogs are always 'presumed' to deliver on their objective to provide consumer protection. That they don't is a complaint commonly heard about regulatory bodies across the globe. So who is regulating the regulators?

Following the collapse of London Capital and Finance back in 2019, the Financial Times editorial team wrote about an earlier FCA inquiry:

"The regulatory failings by the Financial Conduct Authority were detailed by Dame Elizabeth Gloster, a former appellate judge, last year. Her inquiry found a risk-averse watchdog that ignored red flags and failed in its duty to protect consumers. But no heads rolled at the FCA - led at the time of the scandal by Andrew Bailey, now Bank of England governor. Instead, the Treasury select committee on Thursday suggested that the watchdog shied away from applying to itself rules it expects firms to follow and which hold senior managers to account." So, the latest report is simply a case of the past repeating itself. Nothing has changed

It should be of enormous concern that the 2024 FCA report unintentionally outlines the status of regulatory bodies across the globe - "incompetent at best, dishonest at worst". In my own battle against corruption and whistleblower retaliation in the seemingly unregulated hotel industry (involving Marriott International, Minor International and EY) I have received no assistance from the likes of the US SEC, PCAOB, Thai SEC or the UK FRC, the latter of which threatened to classify me as "a nuisance customer". Other hotel industry victims I'm in touch with report the same - in Spain and Egypt for example. Additionally, there appears to be absolutely no international collaboration, which simply makes matters worse. Nobody seems to know, or willing to disclose, which national jurisdiction, and under whose regulatory regime, the activities of transnational hotels corporations like Marriott belong

Regulatory capture, in which regulators become unduly 'influenced' by the industries they are tasked to regulate, appears to be thriving on a global scale. "The phenomenon highlights the inherent tension between corporate obligations to shareholders and regulators’ duty to safeguard the public welfare." (Maximilian Laufer) Why don't we ever call it out for what it really is? Regulatory capture is a form of corruption. Yes, corruption

At the moment, transnational companies in particular are justifiably set in the belief that in the end there is very little they will not get away with. Until that mindset has been obliterated and the regulators become more proactive and impartial (at the very least), nothing will change and corruption will continue to proliferate. The hotel industry could be seen as a test case, a perfect example of corporate impunity largely brought about by regulatory inaction, incompetence and moral subversion

John Shepherd (Marriott, Minor and EY victim and hunger striker)