New Tory regulator could up industry fees
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The Conservative party has conceded that the creation of a Consumer Protection Agency could increase the cost of regulation.
In an interview with the Financial Times, Shadow financial secretary to the Treasury Mark Hoban said that scrapping the FSA and creating a new consumer body may cost the financial services industry more money.
But he argues that the new regulator, working with the Bank of England, would improve regulation for the better.
He said: “[The industry] wants people in the regulator who understand what they do and they understand there is a cost to that.”
Hoban also revealed that a Tory Government would act fast in dismantling the current financial regulation structure.
He said: “We want the Bank to take responsibility for macro and micro prudential supervision in the first year. I think it is quite dangerous to take the foot off the pedal, we do not know what is building up in the markets.”
Hoban admitted that the opposition party has struggled to sell the idea to the City. He also says the Tories would not scrap the FSA on day one but would spend time in moving its powers to Threadneedle Street. He said it would be a “substantive, not cosmetic change”.
He also said the new regulator would be more invasive: “We want to move away from a situation where the FSA is cleaning up the mess after it happens. That does require a more invasive approach.”
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Readers' comments (14)
Neil F Liversidge | 12 Feb 2010 9:44 am
This is unacceptable. If the best the Tories can offer is a cosmetic exercise resulting in an even more expensive bureaucratic nightmare then they have no right to even think of asking for our votes. Clearly the pre-requisite to getting a regulator that knows what it's doing is to get politicians who know what THEY are doing!
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Alan Lakey | 12 Feb 2010 9:49 am
This, as they say, is a no-brainer.
When Governments appoint quangos to spend other peoples money there is always the careless disregard for cost-cutting and sensible budgeting. After all, if there isn't enough in the pot just increase the fees, right?
However, I for one would be happy and willing to pay increased regulatory fees if the body overseeing advisers was sufficiently focused and soundly based that they understood the needs of advisers and consumers in tandem, not singularly.
Theorists need not apply.
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Priceless!! | 12 Feb 2010 10:10 am
'We want to move away from a situation where the FSA is cleaning up the mess after it happens'
So does everybody who cares about the consumers receiving and having access to sound impartial financial advice! The answer is ever so simple Mr Hoban - put in place a regulator who understands what they are regulating and where the biggest problems and complaints come from.
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Brian Harrison | 12 Feb 2010 10:15 am
More empire building and jobs for the boys. The Tories had their fingers in the pies with Fimbra and PIA at substantial cost to our induistry when they were replaced and we dont seem to be much further forward. I say let the FSA evolve dont replace it, they now have substantial experience in dealing with our industry.
It is always the case that sectors of any community will find ways around the rules and it will need a police force to catch them. Above all others MPs should realise it is not always possible to anticipate wrong doing, their expences come to mind.
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Rod Leonard | 12 Feb 2010 10:22 am
Hello Mark ;0)
I await the disembowelment of the FSA and (FOS) with pleasure. However we put you on notice that the FSA is the largest most expensive regulator in the world, why on earth should fees go up if you are dismantling them and putting a sensible consumer body in its place? Do not forget this is the SIB with a change of name which was originally put in by a Conservative government.
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Michael Fallas | 12 Feb 2010 10:30 am
Not impressed with Mr Hoban who I have emailed twice but he has not responded.
I gather he also believes that advice given by banks is fine because they gave mis mother good advice !
Don't expect much from this individual if the Conservatives come to power as he clearly does not understand the issues.
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Evan Owen | 12 Feb 2010 10:40 am
Hector was shocked to discover that I agreed with him on one point, that was the fact that the Tory proposals would cost IFAs another £100 million per annum, after paying for all the new stationery, the website revisions and all the other changes we have been through time and again.
For Mark Hoban to claim that the new regulator, or two, or even three will understand financial services is frustrating when you consider the 8 people who are 'advising' on the break-up of the FSA and the cobbling together of the new regime, none of them have any experience at the coalface, in fact almost all of them were involved in the 'merging' of all the old regulators into one within which the constituent parts still don't talk to each other a decade later.
If you think we are in a mess now I am certain you will not be surprised if regulatory recycling is not a good thing and that it can only get worse.
Nobody listens because money talks.
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Carl S Hall | 12 Feb 2010 10:47 am
The whole financial Services industry is ridiculously and heavily over regulated, would it not be a better idea to break down the different sections into separate regulators such as one for Savings and Investments, one for Mortgage and protection, one for banking etc.
As far as I can remember the Mortgage code compliance Board did a good job and the Fees were very reasonable, this type of regulation would make each section more professional rather than jack of all trades masters of none.
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Simon Mansell | 12 Feb 2010 11:23 am
Higher fees, no commission and 10,000 less IFA's to pay for it all. Sounds like Hoban needs to suspend the RDR cull if for no other reasons that the Conservatives will need someone to fund all this!
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Chris Birchall | 12 Feb 2010 11:30 am
I would run up Snowdon, if one day I read an article form somebody who actually had a grasp and an understanding of what is going on at grass roots level and suggested implementing a system which would be simple for both customers and advisers. MP's and FSA people are living in a dream world so far removed from reality that it is unbelievable. This attitude is clear with the expenses fiasco. What annoys me is not that they have done wrong but that they can not see it. And the money that they earn together with the expences is obseen. So when they ( and in they I mean a broad scope of decision makers)make decisions on how things are to be run, the first thing they think of is change and to do that we need to set up a new body which we all know ends up doing the same job under a different name but in getting there causes huge disruption and confussion to everybody. The public have no understanding of hwat is involved in my job as a financial adviser and when I try and explain it to them they are in disbelief and realise why all the advisers are becoming postmen and gardeners. the FSA is now a Bureaucratic monster that is out of control. Why are the processes for Financial services products treated so much more stringently that say selling a car or a static caravan or a £6000 plasma tele. Everything in life has a financial transaction attached to it and we have trading standards and lawyers available who chase injury claims etc, I do not see why wrong doing in financial services can not be dealt with by the legal profession. Once you start making too many rules it becomes never ending. I am sure many will be reading this thinking, this guy is in cloud cookoo land. well maybe, but I remember a time with far less regulation, far less complaints or mis-selling, far less overheads, free advise for clients, a huge supply of advisers for the clients to choose from and companies making good profits. Sounds familiar ? The Bureaucratics who make decisions live in a world where any increase in costs just goes on expences, they have no concept of the impications or who actually pays for this or that people are living on £15 - £20,000 pa. we only have to look at the health service and the money that is wasted on admin and Bureaucracy. I have heard stories of empty rooms in the NHS full with new furnature and computors which have been thrown out and replaced just because they needed to spend the money to ensure they get the same budget next year. And that is going on when other parts of the service desperately need money. Post 2012 financial advise will be for the few and the wealthy, but the con men will still be around and new ones to take the place of the expelled ones. But along the way 1000's of good quality, not necessarily high fliers, advisers will have left the industry because the way in which they opperate and the client base that they have is un-economic in this new Bureaucratic world. Wake up decision makers and put in place a system that is economically viable.
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