The SME Alliance, a not-for-profit group representing the interests of private companies, presented documents to the FCA relating to the alleged falsification by banks of customers’ records, including within the FCA-sponsored review of the mis-selling of interest rate hedging products.
The SME Alliance has protested that the FCA betrayed confidentiality by passing the sensitive material directly to the banks being complained about. As a result, the FCA had “badly compromised” the interests of some members.
Andrew Tyrie, chairman of the Treasury Select Committee, said the FCA “needs to grasp what’s needed to create an appropriate environment for whistle-blowers”.
The FCA is increasingly seen as unhealthily cosy with the banks it is supposed to regulate. This latest incident fuels concerns that the FCA is a ‘captured’ regulator, hostile towards the consumers it is supposed to protect.
SME News: Tyrie cries foul on the regulator’s ‘betrayal’ of whistleblowers
Tracey McDermott, former chief executive of the FCA, says that the regulator acted appropriately. Jane Mingay James Hurley, Enterprise Editor The Financial Conduct Authority’s alleged mistreatment of a small business group suggests that the regulator does not know how to deal with whistleblowers, the chairman of the Treasury select committee has warned. Andrew Tyrie said that the FCA “needs to grasp what’s needed to create an appropriate environment for whistleblowers” after claims that it betrayed the confidence of informants. The SME Alliance, a small not-for-profit group that represents the interests of private companies, met the regulator last year to discuss concerns over discrepancies and alleged “file falsification” linked to high street banks’ customer records. The group complained in January that sensitive information it presented in confidence to the FCA was shared with the banks that were the subject of their complaints. After the Treasury committee intervened, the FCA admitted that some of the SME Alliance’s documents had been passed on to the banks without the group’s permission. The alliance said that the action had “badly compromised” the interests of some members. Correspondence published on Friday between Mr Tyrie and Tracey McDermott, the former chief executive of the FCA, shows that the regulator decided not to treat the group according to its whistleblower guidelines, which are based on the assumption that informants “almost always want their information and identity to be protected”. Ms McDermott wrote: “We are satisfied that we acted properly by not treating the cases presented to us as whistleblowing matters.” She said that whistleblower status was not appropriate because “a number of the individual customers had… repeated their allegations in the press, and on social media”. Paul Turner, a spokesman for the SME Alliance, said: “I attended the meeting. The FCA definitely accepted SME Alliance was an ‘external whistleblower’ and, at the meeting, they reassured those present all information… imparted to the FCA would be treated in the strictest confidence.” Correspondence from the FCA to the group came from the regulator’s “whistleblowing team”. Last month Andrew Bailey, the new chief of the FCA, said the regulator and the SME Alliance “had a slightly different interpretation” of their meeting.