The Financial Conduct Authority (FCA) has scaled back its use of undercover probes into financial firms, a move that has sparked concerns about the effectiveness of regulation in the City. According to a report by the Financial Times, the FCA has reduced the number of secret investigations it carries out on financial firms, despite taking on sweeping new powers to protect customers and prevent scandals.
The FCA gained new powers under the Financial Services Act 2021, which gave it increased authority to regulate financial institutions. However, the watchdog has now reduced the number of undercover probes it conducts, raising concerns that it may not be doing enough to hold firms to account.
The move has been met with criticism from some experts, who argue that the FCA's reduced use of undercover probes could undermine its ability to detect and prevent financial scandals. 'The FCA's decision to scale back undercover probes is a concerning development,' said one expert. 'It suggests that the watchdog may be relying too heavily on firms to self-report and may not be doing enough to hold them to account.'
The FCA has defended its decision, saying that it is focused on using its resources in the most effective way possible. However, the move has raised questions about the effectiveness of regulation in the financial sector and whether the FCA is doing enough to protect consumers.
According to a spokesperson for the FCA, the watchdog is committed to using its powers to protect consumers and prevent financial scandals. However, the spokesperson declined to comment on the specifics of the FCA's undercover probe strategy.
The reduction in undercover probes has also raised questions about the impact on consumer protection. With the FCA relying less on secret investigations, consumers may be left without adequate protection from financial firms that engage in dubious practices.