FCA considering additional guidance on hedge fund polling

According to a report in the Guardian, the City regulator’s chief executive, Andrew Bailey, told MPs on the Treasury committee that he is considering whether the FCA could provide guidance on how its rules should be applied.

Bailey said: “We are giving thought at this stage…as to whether we could usefully issue guidance, not obviously to change the rules but to issue guidance on the application of the rules, particularly on this question of inside information.”

In June 2018, Bloomberg published a report detailing how hedge funds commissioned exit polls to bet on the price of sterling ahead of the EU referendum in June 2016.

In September 2018, Nicky Morgan, MP and Treasury committee chair, wrote to Professor Sir John Curtice, president of the British Polling Council, to ask him to consider making additions to the council’s rules on the issue.

In her letter, Morgan highlighted two practices she deemed of particular concern: “cross-subsidising of market-sensitive public polls, including exit polls, with revenues from polls for private clients” and “making market-sensitive polling data, including exit polling data, available to private clients before it is made, or legally can be made, publicly available”.

Morgan claimed there could be a “perverse incentive for polling companies to provide misleading or inaccurate information to the media, while providing high-quality analysis on the true state of public opinion to private clients”.

Responding to Morgan’s letter, Curtice said: “The implication of this remark appears to be that during the EU referendum polling companies may have deliberately released inaccurate published polls at less than cost price because this enabled them to extract a higher fee from their private clients. Casting doubt as it does on the professional integrity of the industry, it is a suggestion that we feel either needs to be substantiated or withdrawn.”

The Market Research Society has been liaising with the FCA as it reviews the use of private polling data. Jane Frost, chief executive of MRS, said: “As the regulator for all market and social research in the UK, the Market Research Society (MRS) works to develop, support and regulate standards across the profession. Our members must adhere to the MRS Code of Conduct which includes a series of ethical guidelines for their professional activities when undertaking market and social research. 

“If we were to receive a complaint about one of our members and their activities in relation to the MRS Code of Conduct, we would examine the facts and circumstances in accordance with our regulatory procedures. Of course, though most polling organisations or their individual employees are MRS accredited, a small number have chosen not to be.”