Open letter to the Chief Executive of the new Financial Conduct Authority

Dear Mr Wheatley,

Time for the financial watchdog to learn some new tricks

As the new Financial Conduct Authority (FCA) opens its doors for business for the first time this week, we call on you to make sure that it is a watchdog that can learn new tricks and succeed where the Financial Services Authority (FSA) has failed.

We have been encouraged to see signs of a new, and much needed, tougher approach to regulation of the financial sector but this must be embedded in the culture of your organisation from top to bottom from day one. You’ve already talked about the importance of consumers to your organisation, and you must now deliver by using your new powers to be a strong, open and proactive regulator.

The FSA failed to protect consumers from poor financial products, dodgy sales practices and bad customer service. We ask you to learn from the mistakes of the past and ensure that consumers come first.

To make the FCA succeed where the FSA did not, we want you to:

Tackle bad banking culture – you need to send a clear message that bad behaviour will not be tolerated. We want to see:

  • A tough new code of conduct to change the culture of banking
  • More severe penalties for banks and executives that breach the rules including larger fines
  • Individuals responsible for failures held to account.

Stand up to the banks and promote competition – the FCA can use competition to transform banking if you:

  • Push forward reforms to reduce barriers to entry for new firms to give consumers more choice
  • Make sure all charges and costs are clear and transparent
  • Make it easier for consumers to compare banks and avoid being ripped-off by poor value products.

Be open and act on problems before they spread – there were plenty of opportunities to spot the problems with PPI mis-selling before it developed into such a huge failure. The FCA must:

  • Be prepared to act quickly and issue warning notices
  • Remove misleading adverts and name the firms and products involved
  • Publish the results of all mystery shopping exercises.

Light touch regulation didn’t work. You have the chance to make a big change in banking, where the customer comes first, not the bank. Please don’t let us down.

Richard Lloyd

Which? executive director

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