Hoban warns of 'tricky balance'

14 April 2011 | By Natalie Holt

Treasury financial secretary Mark Hoban has warned it will be difficult to balance the independence of the Financial Services Compensation Scheme with the way the scheme is governed under the new regulatory structure.

Last week at an FSCS awareness-raising event, Hoban said giving the Prudential Regulation Authority and Financial Conduct Authority rule-making powers over the FSCS will be a “tricky balance to strike”.

He said: “The Government proposes both the PRA and the FCA should have rule-making powers over the FSCS, aligned to the regulators’ respective remits, and they will take joint responsibility for ensuring the FSCS can fulfil its functions. But we must ensure the FSCS remains operationally independent. This is a tricky balance to strike.”

Under Treasury proposals published in February, both the PRA and the FCA will have power to make rules governing the FSCS in relation to sub-schemes for which they have responsibility and will be able to raise FSCS levies.

Hoban said the FSCS would help the PRA in promoting financial stability while supporting the FCA’s wider aim through boosting consumer confidence.

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