Advisers have welcomed FSA calls for the Treasury select committee to have more power to scrutinise the new regulators, but are urging the Government to go further.
Giving evidence to the Parliamentary Commission on Banking Standards this week, FSA head of prudential business unit Andrew Bailey said he wants an amendment to the Financial Services Bill to give the TSC the power to force the Financial Conduct Authority and Prudential Regulation Authority to conduct reviews and disclose information.
He said: “There needs to be greater transparency of the judgements we make and the decisions we make than is currently being provided.
“If not then the legitimacy of what we do will inevitably be called into question. Our standing would be undermined and we would get ourselves back into trouble.”
Highclere Financial Services partner Alan Lakey says the lack of accounatbility to date has allowed the FSA to push through unpopular policies such as the RDR and Arch Cru compensation scheme.
He says: “The FSA has been able to give two fingers to the TSC and totally ignore its recommendations. It should be able to issue instructions not just recommendations.
“I would like the Government to go further and create a truly independent body, made up of consumer bodies and industry insiders, that is able to sit in judgement on regulatory decisions.”
Telos Solutions director Richard Farr says: “The FSA has had a lot of wriggle room because it has been accountable to an Act of parliament rather than a particular person or body.
“More accountability through MPs can work but ultimately there should be an annual statement from the chancellor on whether the regulator has achieved its objectives.”