Why the FCA needs to face its own Mr Bates vs The Post Office moment: Mark Bishop

The problem is not just that avoidable harms happen, but that they continue far too long, with the victims forced to fight on for many years for some semblance of justice, while statutory bodies use taxpayers’ money and twist the law to avoid compensating those affected, apologising, sacking and where necessary prosecuting staff, and embracing genuine reform.

The Yorkshire Post’s Chris Burn has lately been investigating another example of alleged organisational failure, namely the reluctance of the Financial Conduct Authority to help elderly customers ripped off following introductions made by some high-profile, commission-hungry building societies to firms making questionable claims to convince elderly and otherwise vulnerable people to move homes and investments into trusts. The effect of these transfers was to hand control of family assets to people who invested the money in unregulated collective investment schemes, most of which are in default.

Chris’ diligent reporting led to Nick Anderson, an employee of Philips Trust Corporation, which made the controversial ‘investments’, giving him an exclusive: in October 2020, Nick contacted the FCA to blow the whistle on the firm, but the financial watchdog did nothing.

As a campaigner for consumer rights in the sector, I am unsurprised. There have been many financial scandals in which the regulator has been accused of, at best, complacency and at worst, covering up for the perpetrators’ wrongdoing and its own failure to act on credible intelligence from whistleblowers, customers, campaigners and others. Examples include the Woodford Equity Income Fund, London Capital and Finance plc, the British Steel Pension Scheme liberation scandal and the plight of mortgage prisoners.

We know that the FCA was alerted to the Philips Trust Corporation misinvesting client money early enough that it could have stopped most of it and secured money already at risk.

In Mr Bates vs the Post Office, the transformative event was a court case in which 555 subpostmasters sued the Post Office. It forced disclosure of documents which proved that convictions were unsafe, leading to some being overturned, redress schemes being established and the police to investigate the conduct of Post Office and Fujitsu executives and lawyers. The journey to justice will be long and painful, but it’s likely that the final destination will one day be reached.

Consumers and whistleblowers who suffer life-changing financial losses through regulatory failure by the FCA would be unable to even begin that process, because it has statutory exemption from civil liability, so can’t be sued. Had the Post Office been given the same privilege, subpostmasters would still be howling in the wind.

MPs could transform the victims’ prospects of achieving justice by publicly backing calls made by the organisation I represent to make three changes to the law:

• repeal the Schedule to the Financial Services Act 2012 that prevents people from suing the FCA;
• ban the regulator from using the Limitation Act 1980 to defeat historical claims brought after such a change is made; and
• impose changes to the FCA’s Potemkin complaints scheme requiring it to award redress for regulatory failure and making the scheme’s findings binding on the regulator

The MP for Leeds West, Rachel Reeves, may soon be Chancellor. Will she side with ‘the skint little people’ and back our proposed amendments? ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​I hope that readers, and her fellow local MPs, will encourage her to do the right thing.

Mark Bishop advises the Transparency Task Force, a social enterprise that advocates for consumer rights in financial services