MPs and members of the House of Lords have today criticised FCA chief executive Nikhil Rathi for his ‘unconstructive’ response to their report published in October which branded the regulator ‘incompetent.’

The All-party Parliamentary Group (APPG) on Investment Fraud and Fairer Financial Services said it “must absolutely refute” Mr Rathi’s claim that the FCA is now “a very different organisation.”

The APPG said it has been forced to published a new supplementary report on the FCA today to set out its response to the regulator.

Bob Blackman MP, co-chair of the APPG, made up of 30 MPs and 14 members of the House of Lords, said: “When we were working on the original report we had no intention of producing a supplementary report shortly after, but doing so has proven necessary because of the unconstructive way the FCA has responded to the original report.”

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

He said that when the original report was published he had “a nagging concern” that “despite the best endeavours of the APPG to produce a report the FCA would take seriously and engage with positively, there was the possibility that they might respond in a disappointing, dismissive, and defensive way.”

He said he had seen the FCA’s response through internal FCA communications which were published through a FOI request by former FCA employee Mr Ahmet Latif.

Mr Blackman said: “To my mind, reading through the FCA’s internal communications, it seems there has been a deliberate attempt by the leadership team to deflect away from the issues our report has raised.”

He also took Mr Rathi to task for his statement on BBC Radio 4’s Moneybox programme that “we're a very different organisation that has taken far reaching action since that time and that's why we wouldn’t recognise the characterisation and some of the adjectives used in that report.”

Mr Blackman said he didn’t believe that the FCA’s Transformation Programme has been a success. He said: “The FCA is far from ‘a very different organisation’ but rather one that remains in dire need of urgent reform and transformation.”

He said he was disappointed that the FCA did not respond to requests to talk about the report, “or even acknowledge or reply to our emails about it.”

He likened the FCA’s problems to The Post Office scandal “which highlighted what happens when there is ineffective Ministerial challenge, especially when the entity itself is providing a consistently inaccurate account of what is happening within it.”

Mr Blackman said: “The FCA, like the Post Office, has too many red flags. And like the Post Office the FCA’s lack of objectivity and self denial of the problem only serves to emphasise how critical the need for a resolution is.”

The new report calls on the FCA to drastically improve its effectiveness as far as consumer protection and consumer engagement is concerned.

The FCA said: “The board discussed the report in December. As the Government acknowledged in its response, we have made significant changes since the events featured in the original report took place and we do not recognise the characterisation of the FCA in the report.  Where there are further lessons to learn, we will take this forward as part of our ongoing work to continuously improve.

“Parliament and Government have numerous mechanisms to hold us to account on our effectiveness. This includes scrutiny by parliamentary committees and, since the original report, we have given evidence twice and the report was not raised with us by either committee.

“Our chair has offered to meet with the APPG’s leadership to discuss our work.  

“We recognise there are a range of views in Parliament about our objectives. We continue to protect consumers while embracing the new secondary growth and competitiveness objective given to us by Parliament. As we set out in our recent letter to the Prime Minister, we welcome a debate and as broad a consensus as possible about the appropriate risk appetite we should work to.”