The Financial Services Consumer Panel has accused the Treasury of destroying the FSA's chance to overhaul existing financial services rules.
It says the Treasury failed to give the FSA sufficient time to conduct a fundamental review of the rules bysetting an unrealistic timetable for the regulator to assume its powers.
The panel wants a wide-ranging review to investigate the implications of new technology, European legislation and the development of benchmark products.
By imposing the original autumn 1999 deadline for the FSA to adopt its powers, the panel says the Treasury “destroyed” the chance for regulations to be fully up to speed in a changing market.
It is also unhappy at the Treasury's decision to allow solicitors and accountants to give financial advice without needing to pass a “fit and proper” test.
The FSA has come under fire from the panel for dragging its feet in dealing with financial scandals such as pension misselling and the endowments crisis.
The panel criticises the FSA for being “too slow” to identify endowments problems and in dealing with offending firms and says it is concerned about the slow pace of the review.
Chairman Colin Brown says: “This is a colossus of new legislation. The Treasury should have been more realistic in setting the timetable. It has lost an opportunity. It is very clear that the timetable was not really viable.”