MPs and members of the House of Lords have today published a critical report on the Financial Conduct Authority (FCA), branding the regulator ‘incompetent’.

The report called for the FCA to be overhauled and said the City watchdog is "too often failing" to perform its functions.

The report, which will be presented in Parliament today, was carried out by the all-party parliamentary group on investment fraud and fairer financial services, made up of 30 MPs and 14 members of the House of Lords.

Bob Blackman, co-chair of the APPG, wrote in the 358-page report that the group had heard “tragic tales of regulatory failure causing enormous financial and emotional distress.”

The report concluded: “The picture painted is not pretty. The FCA is seen as incompetent at best, dishonest at worst. Its actions are slow and inadequate, its leaders opaque and unaccountable.”

It said the FCA had failed to properly investigate and act on information provided by whistleblowers and it said a transformation programme undertaken by the regulator had "not worked."

The APPG collected written testimony from 175 respondents over two and a half years. Respondents included whistleblowers, victims of scams and current and former employees of the regulator.

One former employee said the culture became “increasingly toxic”, and that complaints about aggressive and “macho” behaviour by senior staff were brushed aside.

Another said it was “the worst staff culture I have ever experienced in nearly 40 years. Top-down hierarchical management, Do as you’re told, don’t argue. An astonishing arrogance that FCA ‘insiders’ know more than any newcomers.”

The report suggested a number of reforms including:

• Establishing a supervisory council to review the FCA's effectiveness

• Removing the FCA’s immunity from civil liability to consumers

• Changing the way the FCA is funded

• Overhauling the way the FCA’s senior leadership team is appointed

The FCA told Financial Planning Today: “We sympathise with those who have lost out as a result of wrongdoing in financial services, however we strongly reject the characterisation of the organisation.

“We have learned from historic issues and transformed as an organisation so we can deliver for consumers, the market and the wider economy.”

In the last Parliament, The FCA provided oral evidence 38 times - more than any other regulator. It also provided 41 written updates to TSC, Home Affairs Committee, Science and Technology and House of Lords.

It said its research showed that more than three-quarters of regulated firms report a high level of satisfaction with the FCA. Some 85% of FCA stakeholders (including consumer groups and politicians) agreed the FCA achieves its objective of protecting consumers.