New regulators will be tougher than FSA
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The Government’s new regulators will be tougher on firms than the FSA in a bid to prove their worth ahead of the 2015 election, says City law firm Reynolds Porter Chamberlain.
The Government announced in June that the FSA is being transformed into a prudential authority as a subsidiary of the Bank of England. A new body, the Consumer Protection and Markets Authority, will regulate all authorised firms. The transition is due to take place in 2012.
RPC regulatory partner Jonathan Davies says the Government wants to achieve significant improvements in consumer protection ahead of the next general election.
He says: “Any new regulator is going to want to demonstrate its effectiveness, so it is going to be tough. The new structure is due to be implemented in 2012 and there will be an election in 2015.
“The Government is going to want to say that the CPMA has improved consumer protection and is much better than its predecessor organisation the FSA.”
Facts & Figures Financial Planners managing director Simon Webster says: “The FSA has not exactly been a conspicuous success in any sense.
“It has failed to prevent any of the major scandals, so on one hand I will be deliriously happy to see the end of the FSA.
“But the new body is likely to come in and clamp down on the market with a heavy rulebook when that is not the solution. We keep seeing more complicated rules and changes but none of them are effective. What we need is a regulator that is proactive and responds to market information before things go wrong, not after the event.”
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Readers' comments (15)
David | 2 Jul 2010 9:26 am
No problem with tougher. However, it would be hard for them to be as incompetent, inconsistent and totally off the ball.
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Anonymous | 2 Jul 2010 9:28 am
They will likely have higher salaries as well.
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Philip Whitworth | 2 Jul 2010 9:30 am
I welcome regulation as long as is fit for purpose and proportionate. What we have seen with the FSA is them taking on the smaller IFA's as they have not got the financial backing to challenge them. The Banks can bring in the legal muscle to take on the FSA if they need too.
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Anonymous | 2 Jul 2010 9:34 am
If ever an institution by any name wants to completely ruin the UK Financial Services industry the idiots at the FSA come what ever there new name is are doing just that
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Iain | 2 Jul 2010 9:35 am
For "tougher" read a lot more expensive with huge salaries needed to attract the right sort of parasite.
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Marty | 2 Jul 2010 9:44 am
Like you, David I have no problem with tougher but it has to sensible. Out with the one size fits all approach as various sectors of our profession have different risk levels and the higher the risk posed, the more they should pay in terms of systems, controls and fees. I hope they have a good look at the stats for complaints i the past to see exactly where the risk is and then use this to ease off on the cost to an IFA. We have by far the lowest percentage of complaints against us and yet we are tarred with the same brush in the FSA's eyes as those with the most complaints. It doesnt take rocket science to work out where the risk lies of clients getting stiffed and thats where the rules and costs should be imposed the hardest. I am not saying for one second that we be let off scott-free but for Gods sake lets hope they take a fresh look at the catestrophic state the FSA has left the IFA sector in. One of their statutory obligations is to maintain public confidence in the financial system. Well, hello? It would be some feat of marketing & spin to produce a survey that showed they have achieved this. AIFA needs to get lobbying right now for our sector and give some serious positive information and figures to those charged with runningthe new organisation. All I can say is God help the country if Mervyn King ends up being replaced by Hector Sants. He made a complete has of an industry while in charge of the FSA, what state will we be in if he takes over the whole of the BoE? to quote private Frazer from Dad's Army "We're all dooooomed!!!!!!!!!!"
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Mr Smug | 2 Jul 2010 9:46 am
Tougher is good. Hopefully this means that the people who run firms such as Keydata will no longer be able to walk away and dump their liability on the rest of us.
I'd vote for tough - providing of course - that it is tough and FAIR.
No more picking on the small guys and letting big firms and banks off.
It would be nice if the rule of law was re-instated as well. The financial services police state that we have endured for the past ten years should not continue.
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Steve Laird | 2 Jul 2010 9:51 am
It's just words - regulation does not need to be tougher. It DOES need to be more effective and more rigorous when necessary.
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Julian Stevens | 2 Jul 2010 9:56 am
So just who in government has, without telling anyone else, let Reynolds Porter Chamberlain in on what the CP&MA is going to be like? Does Jonathan Davies have some special line of communication with one of the Whitehall mandarins or is this, in fact, just speculation?
The principal thing that the CP&MA must be be held to is the Statutory Code of Practice For Regulators, as drawn up by the Dept. for Business Enterprise & Regulatory reform and that says nothing about being tough just for the sake of it.
What the CP&MA (or the body setting it up) needs to do is look at how and why the FSA has failed so badly in so many areas and why it has blown such colossal sums of industry money in the process. That doesn't mean being harder, tougher and nastier. It means being more accountable, more cost effective, more competent, more efficient and more willing to engage constructively with those it regulates.
So tell us Mr Davies ~ where'd you get your information from?
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Mike | 2 Jul 2010 10:12 am
After 30+ years in the industry, I have seen long-overdue regulation implemented in a way that is bound-up in red tape, littered with daft and fractious rules, and where the two words "common" and "sense" have no place. It could have been so good, but successive regulators have simply messed up, with often and unfairly, the buck stopping with the beleagured IFA when the big boys/banks are the REAL culprits. I fear for the industry after 2012, because not much else has been done well so why should we expect anything different then?
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