Treasury select committee chairman Andrew Tyrie has warned the Government’s intended legislative process to replace the FSA may not fix operational flaws.
New legislation is required to replace the regulator with the Prudential Regulation Auth- ority and the Financial Conduct Authority. A new bill can either amend and replace parts of the Financial Services and Markets Act 2000, leaving some parts on the statute book, or replace the FSMA completely.
The Treasury says that reform will be “best achieved” by amending and replacing parts of the act. But the select committee is calling for the legislation to be revisited in its entirety.
Speaking to Money Marketing, Conservative MP Tyrie says amending the FSMA could leave operational flaws. He says: “Fresh legislation would have been an opportunity to revisit what had clearly come to be seen as operational flaws. Witnesses have told us a good deal of what the FSA is doing is not generating the benefits we would hope for.”
During a February evidence session on competition and choice in the banking sector, Tyrie asked Treasury financial secretary Mark Hoban six times if a new bill would be introduced or changes would be made by “dog-eared amendments”.
TSC member Andy Love says: “There was calculated ambig- uity in what Hoban said. He said there will be a new bill related to financial services, whereas the chairman was asking him if we will be starting from the beginning.”
Tyrie says: “Although technically it is a new bill, it is a cut and paste job and there is a risk of importing legislation on areas of regulatory activity where it might have been better to think again.”