MPs lined up to criticise the watchdog over a multitude of areas, from how it supervises banks paying compensation for mis-selling interest rate hedging products and the inadequacies of the senior managers regime.
MPs called the watchdog ‘blundering’ and ‘weak, toothless and anaemic’.
The watchdog was also criticised for ditching a review of banking culture and for a delay in publication of a review of alleged mistreatment of business customers by Royal Bank of Scotland.
The regulator’s independence from the government remains under question with some MPs worried after Chancellor George Osborne ousted its hardline chief executive, Martin Wheatley, last year.
Last week, Andrew Bailey, a Bank of England deputy governor, was named as Wheatley’s replacement as FCA CEO.
MP John Mann said the FCA appears to have been weakened, with consumer champions inside the watchdog removed in recent months. The watchdog was ‘neutered’ by the ‘big brother’ of the finance ministry and the Bank of England, Mann said.
Mark Garnier, a Conservative MP, said while the regulator has not been entirely fair to consumers at times, a more rounded view was needed to avoid ‘throwing out the baby with the bath water’.
The watchdog had successes in fining banks for trying to rig currency markets and the Libor interest rate benchmark. Approving the motion would hamper Bailey and tell the world that British financial supervision was not ‘fit for purpose’, Garnier said.
“It’s important that we start him on his career at the FCA with goodwill rather than a problem to deal with,” Garnier said.
Conservative MP, Jacob Rees-Mogg, called for the motion to be withdrawn, adding that many of the regulator’s problems pre-dated the FCA launch in 2013.
In closing the debate, City minister Harriett Baldwin urged lawmakers not to support the motion and a vote was not held.