Auto-deleting emails forces us to ask, what is the FCA trying to hide?
The FCA’s plan to auto-delete emails is an exercise of managing reputation, not standards, writes Eliot Wilson
The Financial Conduct Authority (FCA), like all the United Kingdom’s major regulatory bodies, has been in the news recently as the government searches desperately for a way to kick-start the economy. On Christmas Eve, the Prime Minister wrote to the regulators demanding “concrete proposals” to “prioritise growth”.
I suggested a few weeks ago that Sir Keir Starmer’s appeal to the FCA and others was an exercise in spreading blame for lacklustre economic performance. In any event, the primary role of regulators is to enforce standards and protect consumers. In order to do that, they must be, like Caesar’s wife, beyond reproach, exhibiting at least the standards of fairness, transparency and ethical conduct they demand of the industries they police.
The FCA’s email deleting plan
It was astonishing, therefore, to read last week that the FCA intends to begin deleting emails which are more than 12 months old as a matter of course unless their content is decided to be important enough to retain in its data repositories.
The FCA has two complementary roles. It regulates both retail and wholesale financial services providers, but it is also responsible for the integrity of the UK’s financial markets as a whole “to support a healthy and successful financial system, where firms can thrive and consumers can place their trust in transparent and open markets”. The word “conduct” here is vital: it is not simply about abiding by a set of rules or regulations, but demonstrating a broader sense of responsibility, honesty and openness.
Even more extraordinary than the fact of its new policy of wholesale deletion of emails was the way in which it was presented. The organisation’s intranet informed staff that the new practice “reduces the legal and reputational risk we face”, though this was hurriedly qualified by its insistence that “deleting unnecessary emails… means we will be able to retrieve information more efficiently”. Any correspondence which had to be retained under regulatory or legal requirements would, of course, be exempted.
It is not quite that straightforward, and campaigners as well as regulated industries know that. Charlotte Hill, a partner at international law firm Charles Russell Speechlys, pointed out to this paper that, for example, a decision to take no action over a potential regulatory issue would not be captured by the rules and “the FCA will be able to say, quite truthfully, that it has no record of anyone ever having raised the point”.
Managing reputation, not standards
There is a grim piquancy in the fact that the FCA maintained a number of IT contracts with Fujitsu, despite the company’s scandalous misconduct with the Post Office. It considered ending the contracts in 2021 because of poor performance and breach of agreed service standard but as of a year ago still had contracts worth £9m. Fujitsu’s involvement does not increase confidence in the FCA’s accurate and responsible management of records.
There is also a powerful whiff of double standards. The FCA imposes stringent standards of data retention on the industry it regulates, with investment companies required to keep information for five years, other companies for three years and pension transfer services indefinitely. There is no indication of the FCA relaxing its conditions for others while it takes a less onerous approach to its own records management.
We should not get lost in the thicket of details here and allow the broader picture to be obscured. Take a step back: it is obvious that the financial services sector, which generates nearly a tenth of the UK’s economic output, relies on the appearance and reputation of probity and transparency. People want to do business in the UK, and in London especially, because we have clear and reliable standards. The FCA is central to maintaining that situation.
If the regulator then announces, in effect, that it will take its records round the back of its headquarters at 12 Endeavour Square and burn them after a year, inevitably many will wonder what it is trying to hide, what virtual paper trail it wants to eliminate. Its explanation that it will be able to retrieve information more efficiently rings false; the idea that it reduces the FCA’s legal and reputational risk sounds far more plausible, and far more disreputable.
Eliot Wilson is a writer and strategic adviser