Treasury Committee publishes report into Financial Conduct Authority
- Published on Friday, 13 January 2012 09:21
- Posted by Scott Buckler
The Treasury Committee has today published a report into the Financial Conduct Authority (FCA) containing a number of recommendations for the Government's consideration ahead of the drafting and publication of the Financial Services Bill early in 2012
Commenting on the publication of the report, the Chair of the Treasury Committee, Andrew Tyrie MP, said:
"We need a fresh approach to regulation.
The plain fact is that the FSA did not succeed in protecting consumers from spectacular regulatory failures. The mis-selling of PPI and endowment mortgages are just two examples. The FSA is not only expensive, for which the consumer always pays, but many have told us that it has also become bureaucratic and dominated by a box-ticking culture.
The creation of the FCA is an opportunity to create something much better.
If we are not careful, the FCA will become the poor relation among the new institutions. But it is the one that will matter most to millions of consumers."
Among the Treasury Committee's recommendations are (with quotes from Andrew Tyrie):
- That the Government should legislate to give the FCA a primary objective to promote effective competition for the benefit of the consumer. This is closely in line with the thinking of the Independent Commission on Banking and the Office of Fair Trading.
- "The Government must put competition at the heart of the new regulatory framework."
- That the FCA develops far more reliable estimates, in collaboration with the industry, of its own cost effectiveness.
- "The cost-benefit analysis done at the moment has been variable in quality and effectiveness, to say the least. Something much better can and should be done. It can be one of the best ways of protecting the consumer from ever-rising fees."
- That the Government differentiates between retail and wholesale consumers.
- "The FCA will have to protect a wide range of consumers; the Government’s legislation should reflect this. The level and type of protection required by an individual investor will often be inappropriate for a major financial institution."
- That both the FCA and the financial services industry make better efforts to communicate with each other.
- "Too often we’ve heard that the FSA is aloof and unapproachable and that, in any case, firms are nervous about approaching them - we must break with that culture. Encouraging a greater level of engagement between firms and the regulator is in the consumer interest."
- That the current legislative proposals be revised to ensure that the FCA is properly accountable to Parliament and that tools are available to enable the required level of explanation from the regulator.
"A higher level of accountability to Parliament can help provide better quality regulation and avoid the problems that have plagued the FSA in recent times."