A coalition of consumer groups and advocates have delivered an open letter to MPs and FCA employees urging them to 'hold the FCA to account' over its proposed email deletion policy.
The letter has been sent to the Economic Secretary to the Treasury, plus the chairs of the Treasury Committee, the Lords Financial Services Regulations Committee and the FCA’s Financial Services Consumer Panel. The letter asks them to urgently seek an undertaking from the FCA to abandon its plans to delete most emails automatically after a year.
They argue that the policy, which is due to come into effect from 1st April, would "undermine attempts to hold the organisation to account". It points out that Freedom of Information requests, Treasury-mandated external reviews and legal challenges would all be adversely impacted, as would the FCA’s own ongoing regulatory work.
The open letter states: "When challenged by the media, the FCA has claimed that only ‘unnecessary’ emails would be destroyed and that those subject to FoI requests would be preserved. However, the organisation and its staff cannot possibly anticipate with complete accuracy which emails may be needed in the future, whether for FoI or DSAR requests, Parliamentary Committee inquiries, HMT inquiries, litigation, judicial review - or its own supervisory and enforcement activities. Automatic deletion of emails therefore presents inevitable, avoidable and irrational risks to the performance and accountability of the organisation that you lead."
Last month, the FCA issued a statement 'setting the record straight' after it received criticism over the plans. Ian Phoenix, director of intelligence and digital at the FCA, said: "We're not deleting evidence. We’re not hiding information. We’re not reducing transparency. There is no change to our policy of what constitutes a record and how long it should be saved for."
However, the coalition rejects the FCA’s defence, pointing to the FCA’s own admission made in a statement on its staff intranet that the intention is to reduce ‘the legal and reputational risk we face’.
The letter concludes: "We cannot think of any other statutory body that employs such a draconian and opaque policy in respect of its email correspondence. With the cost of data storage falling precipitously in recent years, it is difficult to see a legitimate rationale for the proposed change. Indeed, in the announcement of the new policy to staff on its intranet, we note that the FCA was candid about its true intention, namely that it ‘reduces the legal and reputational risk we face.’"
Co-signatory Aleksandra Maczynska, managing director at Better Finance, commented: “Better Finance actively works with supervisory authorities across Europe, and is concerned by the announced FCA policy of automatically deleting emails after 12 months. We would strongly recommend to reconsider setting what could be a dangerous precedent. Supervisory authorities should strive toward more transparency and accountability, not less.”
Mark Northway, policy director at ShareSoc, said: “As an organisation dedicated to supporting the interest of investors, ShareSoc is sensitive to the importance of trust and confidence in the financial sector and the regulatory framework that governs it. The FCA’s proposal to delete emails by default after 12 months (unless they have been actively identified as requiring retention and processed accordingly) is completely inappropriate. The plan will inevitably reduce trust in the integrity of information and audit trails, and is hugely exposed to the risk of manual error. The regulator must be seen to hold itself to a higher standard than the industry it regulates.”
Anthony Stansfeld, former Thames Valley Police Crime Commissioner, commented: “If my helping to get criminal bankers put where they belong, behind bars; and my disappointing experience dealing with Andrew Bailey when he was CEO of the FCA, has taught me anything, it’s that evidence, however insignificant it might initially seem, must not be thrown away.
"The forensic value of just one email can make all the difference in prosecuting a case. You just don’t do it and I’d be suspicious of any statutory body tasked with investigation, regulation or enforcement wanting to automatically delete potential evidence after 12 months.
"All kinds of phrases come to mind about how to express how naive the FCA’s proposed policy is, but I’ll resist the temptation to do so, for now.”
Andy Agathangelou, founder of campaign group Transparency Task Force, added: “A prerequisite for good regulation is having credible regulators. Any regulator that introduces a policy that may result in the deletion of important evidence, through error or otherwise, places their regulatory credibility in jeopardy.
"For the sake of what’s left of the FCA’s domestic and international credibility, and given the alarming lack of consultation on this highly contentious issue, I’d like to see the FCA either call a halt to what they are planning to do, or at the very worst put a pause on proceedings until a proper Treasury Committee inquiry about the FCA’s plans and their true motives behind those plans has taken place.”
