When the Financial Conduct Authority was put in charge of overseeing the IT systems used by firms in the city, they purchased software which was designed to assist them with that task, at a cost of £3.2 million. Subsequently, they have revealed that this has been ditched without being used, despite the costs involved, demonstrating that the planning process which they used may have been somewhat flawed.
The licenses for the software were purchased upfront for a discounted price which ran to around £4.2 million, and according to the FCA, the expected utilisation of the licenses has failed to materialise. £3.2 million of this total has apparently been written off as a constructive loss, according to the FCA’s annual accounts, in the aftermath of the deal that it struck with Oracle in May 2014.
Commentators’ understanding of this announcement is that the FCA was so keen to get a good deal on the licenses that they made an advance payment for them in order to take advantage of the discounted price, and then subsequently realised that they were not needed.
This means that the one-year contract for the software has now expired, in May 2015, and has not been renewed, suggesting that the natural ending to the agreement has passed without the software being needed at all. The information came out as the result of a Freedom of Information Act request which forced the FCA to confirm that they had purchased the licenses for projects that had subsequently been ‘de-prioritised’.
The Mail on Sunday has also quoted the regulator as saying that they had been in the position where some of their projects had been implemented later than was originally anticipated, meaning that they no longer fell within the time limits of the original one-year timeframe attached to the licenses. They also revealed that some of the projects that they were working on are now going to have an alternative technical solution implemented in order to achieve their goals.
For those who were hoping that the FCA would take the City in hand and provide more transparency and additional safeguards which would ensure that the financial systems in place were being regulated more effectively, but news like this does undermine the confidence that was placed in the FCA somewhat. However, they are still claiming that this was very much a one-off in the light of the rigorous standards to which the firm usually holds itself.
Any contractor who likes to keep on top of the latest news but finds it hard to make the time could benefit from the input of a specialist contractor accountant. Our team keep on top of all the relevant details of news which could affect contractors so you can focus on the important business of running your business, so for details of our services and specially designed packages, call us today on 01253 362062 or email us at firstname.lastname@example.org.