Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the effectiveness of the FCA's regulatory regime in the Azure Service Ltd. case, and what discussions his Department have had with the FCA on lessons to be learned in the licensing of financial services as a result of the Azure Service Ltd. case; and if he will make a statement.

The Government recognises the impact on consumers as a result of Azure Services’ business practices whilst it operated as a credit broker without the relevant Office of Fair Trading (OFT) licence and, later on, Financial Conduct Authority (FCA) authorisation. However, the Government notes the decision by Barclays Partner Finance to refund over £210m to customers who took out a loan following an introduction by Azure Services.

The FCA has been established as an independent regulator responsible for the supervision and regulation of conduct in financial services. The FCA’s independence from Government does not mean it can act arbitrarily, rather it must operate within the framework of statutory duties and powers agreed by Parliament. As well as being required to operate within this framework, the FCA is fully accountable to Parliament for how it discharges its statutory functions.

This direct accountability to Parliament reflects the FCA’s statutory independence and the fact that they are solely responsible for everyday operational decisions without Government approval or direction, and so are primarily accountable for them. That notwithstanding, the Treasury plays an important role in holding the FCA accountable, including through engaging closely with the FCA across all levels of seniority.

The FCA is currently part way through its Transformation Programme, which is accelerating an ongoing programme of reform to make the FCA a more innovative, assertive and adaptive regulator. Amongst other things, the Transformation Programme aims to ensure that the FCA can make fast and effective decisions, and prioritise the right outcomes for consumers, markets and firms. It also involves significant investment in the FCA’s systems and capabilities to enable better use of data and intelligence to regulate 50,000 firms effectively and efficiently.

As part of its Transformation Programme, the FCA has enhanced its approach to authorisations, including by applying its standards more robustly.