The UK’s financial industry regulator, the Financial Conduct Authority, has been slammed as “incompetent” in a scathing report from politicians.

They claim the FCA is “too often failing” to perform its functions and want it comprehensively overhauled.

A Financial Times report says the report – presented to Parliament yesterday – accuses the FCA of “doing too little too late – or nothing” to prevent wrongdoing.

The report is the work of cross-party MPs and Peers and includes testimony from 175 respondents collected over two and a half years.

The report concludes that the FCA is “incompetent at best, dishonest at worst”, that its actions are “slow and inadequate” and that its leaders “opaque and unaccountable”.

It claims the FCA has failed to properly investigate and act on information provided by whistleblowers and it dismisses a so-called transformation programme undertaken by the regulator as having “not worked”.

The report 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.

Current and former FCA staff said the regulator had a “defective culture” in which “errors and inaction” were “too common”.

A former FCA employee told the parliamentary group they had experienced “the worst staff culture I have ever experienced in nearly 40 years”. One current FCA staff member said they had tried to raise “serious and challenging questions” but they were “criticised, bullied and sidelined”.

Those who challenged a top-down “official line” on any given issue were “bullied and discriminated against, or even managed out”, said some current and former employees.

The report said that the culture “has got worse rather than better in recent years, in which errors and inaction are too common, where there is little accountability, and those who challenge a top-down ‘official line’ on any given issue are bullied and discriminated against, or even managed out”.

The report said the watchdog’s treatment of whistleblowers and their evidence was “alarming”, adding that the organisation failed to investigate properly and act on intelligence provided, and failed to protect – and in some cases, actively harmed – those who provided information.

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 suggested reforms – some of which will require legislation – include introducing a no tolerance policy for a lack of integrity; establishing a supervisory council to review the FCA’s effectiveness; changing how the FCA is funded; and revising the way the FCA’s senior leadership team is appointed.