Changes to the Financial Conduct Authority’s strategic objective are planned to make its main focus is ensuring that financial markets “function well”.
Guidance on the Financial Services Bill, published last week, says the FCA’s objective should be ensuring that the relevant markets, including the financial markets and markets for regulated financial services, function well. It states the FCA’s operational objectives should be securing an appropriate degree of consumer protection, protecting and enhancing the integrity of the UK financial system and promoting effective competition in the interests of consumers.
Under the previous Treasury proposals, the FCA’s strategic objective was protecting and enhancing confidence in the UK financial system. Its three operational objectives were securing an appropriate degree of consumer protection, protecting and enhancing the integrity of the UK financial system and promoting efficiency and choice in the market.
The changes acknowledge concerns from consumer groups the Independent Commission on Banking, the Treasury select committee and the FSA about the previous proposals.
Which? chief executive Peter Vicary-Smith said the FCA’s objective to protect and enhance confidence in the system could encourage the regulator to keep problems quiet while the TSC’s report into the FCA said the objectives were flawed.
The committee called on the Government to scrap the strategic objective and add a fourth operational objective of promoting effective competition for the benefit of consumers.
Treasury select committee member and Labour MP Andy Love says: “It is not easy to define what is meant by ’well’ and judging the regulator’s performance against it would be a pointless exercise. We need something better.”
Bloomsbury Financial Planning certified financial planner Robert Lockie says: “The question is whom is it working well for?”