The Financial Conduct Authority is "failing" at its duties and someone needs to "take control and change that", according to Alistair Carmichael, MP for Orkney and Shetland.
Speaking at a debate about the accountability of the FCA in Westminster Hall yesterday (May 1), Carmichael discussed how he first began looking into the regulator after 95 members of his constituency were victims of a Ponzi scheme run by Alistair Greig.
He said: “On three occasions the FCA failed to read the warning signs, failed to take action and as a consequence, Alistair Greig was allowed to continue with this scheme.
"Had it acted at the first available opportunity there would only have been one victim of Greig rather than the hundreds that there subsequently were.”
Greig, who owned and ran Midas Financial Solutions in Scotland, had been sentenced to 14 years in jail in 2020 after he was found guilty of a large scale investment fraud.
He ran a Ponzi scheme, in which new investors' funds were used to pay existing investors, by persuading them to put their cash in guaranteed high-interest accounts.
Midas pitched the investments as offering attractive returns on "favourable terms" made possible by the owner's supposed relationship with a high-street bank.
However, the high-interest accounts had never existed and instead, investors’ money was placed into the Ponzi scheme, operated by Greig.
He then used this money to fund his own personal investments.
Carmichael said: “That was how I got interested in the FCA in the first place. But as is often the case once you start lifting rocks, what you find underneath takes you off in other directions.
“And I'm afraid that I found little about the FCA we should be happy or optimistic about right now.”
'Name and shame' proposals
Carmichael discussed the regulator’s ‘name and shame’ proposals whereby the FCA is looking to publish updates on investigations “as appropriate” and be open about when cases have been closed with no enforcement outcome.
This includes publicly announcing when it has opened an enforcement investigation, including the identity of the subject of the investigation, as well as publishing updates, if it is in the public interest to do so.
At present the FCA only publishes information on its enforcement action when it leads to an outcome, for example a sanction or a notice to pay redress.
Carmichael said: “The reputational consequences of naming and shaming at such an early stage could be absolutely catastrophic. And the people who will be most directly affected are not the big city firms because they're big enough to withstand the damage.
"It will be the small and medium sized enterprises for which the FCA I’m afraid does not demonstrate the level of concern that it should.”
Carmichael also mentioned how he had spoken to employees of the FCA about their experiences working there, he said morale among staff was “pretty poor” with some feeling undervalued by senior executives.
