Investor Event

FCA’s Mission Needs Substantial Reform, says ShareSoc

PRESS RELEASE 86 23/01/2017

ShareSoc (the UK Individual Shareholders Society) has submitted its response to the Financial Conduct Authority’s public consultation on its “Future Mission” with a hard-hitting critique of their activities.

We have been concerned for some time about the effectiveness and focus of the FCA and the consultation document tends to reinforce our view on that. It is a somewhat discursive document without a clear focus on the main issues that need to be faced in the future by the FCA, or its past failings. The main concerns of our members about the operations of the FCA can be summarised under these headings:

1. Not recognising that individual investors participate directly in capital markets, i.e. there is an artificial distinction drawn between wholesale and retail markets which does not and should not exist.

2. As a result of the above, not ensuring that individual investors are protected from financial market practices that have grown up which prejudices their interests – for example the now widespread use of nominee rights that destroys shareholder rights, the use of share “placings” that discriminate against private investors, the use of schemes of arrangements, the use of pre-pack administrations, and similar changes.

3. The encouragement of speculative trading practices such as the promotion of Contracts for Difference to retail investors who typically lose money on them in which the FCA has only recently taken an interest. In general the FCA has been too slow to respond to changes in market practices and too slow to stop abusive activities being promoted to retail investors.

4. The failure to ensure a level playing field between institutional investors and retail investors (no equivalent of the US Fair Disclosure Act for example) and the restriction of information provision to private investors.

5. The failure to vigorously and expeditiously investigate complaints about the activities of public companies and financial market participants, the failure to report the results of such investigations and the use of “private warnings” instead of public censures.

6. The failure to investigate possible breaches of the Financial Services and Markets Act (FSMA), but relying on investors to pursue civil legal actions which can be enormously expensive.

7. The general failure to ensure fair, honest and well functioning markets. This is a particular problem in the shares of smaller companies such as those listed on AIM.

ShareSoc Chairman Mark Northway had this to say: “Our Members repeatedly complain about the ineffectiveness of the FCA and their failure to enforce open, fair, and honest stock markets. It really is time for substantial reform of the FCA and for it to adopt a mission statement to cover the points we have made in response to the consultation. Their consultation document does not seem a well focussed paper that will achieve that objective.”

ShareSoc’s full response to the FCA on their consultation can be read here:

For further information please contact:

Roger Lawson

Deputy Chairman, ShareSoc

Telephone: 020-8295-0378


Mark Northway

Chairman, ShareSoc

Telehone: 020-8295-1465

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