Double standards bombshell: Employees accuse FCA of bullying and harassment in record year of complaints
The FCA may be regarded as a force to be reckoned with by many electronic trading firms who have felt the wrath of its restrictive measures on CFDs, but now the FCA itself is the subject of record numbers of bullying and harassment complaints from its own staff.
Transparency and freedom of information are two very important key factors in business, and thankfully the major centers of the financial services industry are set within high quality environments with very low levels of corruption, good business ethics and government and regulatory efforts that continue to champion the cause of responsibility.
The US, UK and Australia are three major global centers, and are renowned for being among the most transparent, well run economies on the planet.
This is certainly a good thing, and by its nature, the public availability of information and requirement to disclose all areas of business applies not only to private business, but to the public sector too, including financial markets regulators.
Today, a rather unusual subject of derision is the internal culture at the Financial Conduct Authority (FCA), Britain’s non-bank financial markets regulatory authority which oversees the commercial ethics of some of the largest electronic trading firms in the world.
Whilst it is clear that the FCA is a pragmatic regulator which operates in a genuine free market meritocracy where who plays golf with who holds no sway – the reinstatement of Plus500’s trading in 2015 after lobbying efforts from domestic giants is testimony to the adherence to due process – a freedom of information procedure which London’s Financial News claims that it used to obtain information has led to the exposure of 14 cases of complaints by employees at the FCA, accusing the regulator of bullying and harassment.
This may well be the age of the snowflake generation, however its the increase over last year’s figures that is of interest.
Figures obtained via a freedom of information request show employees brought 14 cases of bullying and harassment against the FCA last year, up from just four in 2017. All the incidents were investigated by the regulator, two people were fired and three were subject to disciplinary proceedings as a result.
According to that report, nearly 30 cases of bullying and harassment have been investigated at the FCA internally since 2016. Andrew Bailey, who was appointed CEO of the FCA in July 2016, is considered a front-runner to become the next governor of the Bank of England but his chances to take over that job will largely depend on how well he does at the FCA.
The report states that in the three years prior to 2016 just seven incidents were investigated while only two cases of bullying and harassment were probed between 2009 and 2012.
This has now reached the central government, and Maria Miller MP, who chairs the House of Commons Women and Equalities Select Committee, has stated that the figures could be a sign of “improved internal reporting” at the FCA but called on the Treasury Select Committee to look into misconduct at the financial regulator.
It could also be that the ‘snowflake’ generation, which is prevalent among public sector, left-leaning cosseted society, has become increasingly oversensitive and that when asked to not be late for work, for example, a threat of bullying could arise. There is no evidence to state that this is the case, but until all is investigated and proven, an open mind must be kept.
Vince Cable, the leader of the Liberal Democrats, who has been vocal about matters relating to the FCA, told Financial News: “The scale [of the investigations] is surprising and suggests an organisation in some stress.”
When asked by Financial News to comment on the matter, the FCA did not provide any statement on what steps it is taking to irradicate misconduct internally, but a spokesperson said: “Allegations that fall under the FCA’s equality complaints procedure are taken very seriously. In all cases we follow a formal investigation route, which recognises the serious nature of the allegations. Where an allegation is upheld, the FCA follows the disciplinary procedure in order to determine the appropriate sanction for the individual against who the allegations were raised.”
When looking at alleged bullying, it is of course very subjective as to what constitutes double standards.
Two years ago, when the FCA began to look at taking draconian steps toward restricting how CFDs are provided in a domestic market of largely satisfied customers who are loyal to large, 30 year established CFD firms on home soil, FX industry sentiment was that the FCA is effecting a type of bullying onto the OTC electronic trading industry, led by lobbying efforts from large exchanges.
“It is quite apparent that the regulators, along with other institutions are setting in place the framework to have the entire non-bank OTC business revamped on exchange” said a senior FX executive at the time.
“This is apparent from many things, one of which is the advertising bans which have been imposed on non-bank retail FX firms in France, Belgium and soon Germany while you can easily advertise the same underlyings on exchange” he continued.
Another angle from which pressure is mounting is from within the large exchanges, which many industry executives believ are attempting to lobby the regulators as well as to gain influential controlling stakes in OTC businesses in order to attempt to push all retail trading onto exchanges.
“CME Group is looking at a project whereby they come up with a rolling spot contract which is a direct competitor to OTC derivatives firms” said a London-based prime of prime executive.
“This is not a consolidation in my view, it is an attempt to move the non-bank retail FX business globally to a different model. The exchanges have woken up to the fact that a large part of their retail businesses has moved off exchange and they want to get the business back. Scandals in the OTC industry, bankruptcies related to SNB type events and binary options scammers have given ample justifications to exchange lobbyists to argue against the OTC retail industry. In the end who do you think has more clout with the FCA? The LSE or IG markets ? It is obvious who is going to win” said an institutional FX executive on the matter.
Mary Inman, who leads the international whistleblower practice at litigation specialist Constantine Cannon said: “The FCA is a role model to financial services firms, so it’s alarming that its own people are being accused of bullying and harassment. If the regulator can’t keep its own house in order, then how effective can it be when investigating City firms?”
Lawyers urged the regulator to include itself in the Senior Managers and Certification Regime, which was introduced in 2016 by the FCA to hold top managers responsible for failings on their watch.
“The FCA should as a matter of best practice be collecting data on itself annually regarding its whistleblowing, harassment, bullying, discrimination and victimisation reports and how it is faring – like an annual check-up. What’s good for the goose is good for the gander. It would seem hypocritical for them not to do so,” Ms Inman added.
Thus, it could be construed that if a regulator wishes to lead an initiative to force the more innovative, yet smaller FX industry into submission to please the giants with lobbying power, then it must lead by its own example and not create alleged bullying and harassment complaints which subsequently end up in the public domain due to the transparent (thankfully!) climate of the United Kingdom.
Still, could be worse.. It could be the Labour Party in charge…