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Cable says axing FSA would cause RDR chaos

Liberal Democrat Shadow Chancellor Vince Cable has slammed Tory plans to scrap the FSA and replace it with a consumer protection agency, saying it would “cause chaos” for the retail distribution review.

Speaking to Money Marketing, Cable said the Conservatives may be forced to rethink their proposals and urged them to offer more clarity on how the changes would affect the RDR. He said the power-sharing dispute between the FSA and the Bank of England should be dealt with in a “more grown- up way” than simply abolishing the FSA, although improvements in its regulation are needed. Cable said: “The idea of just abolishing the FSA and bundling all its people into the Bank of England does not seem to be very sensible.

“Now the problem for the RDR is that if the Conservative proposals are accepted, banks and other financial institutions will be regulated by two separate bodies. They will be regulated by the Bank of England in respect of systemic stability and by some as yet unspecified consumer body in respect of consumer protection and this is potentially going to cause chaos and a great deal of inefficiency.”

Syndaxi Financial Planning managing director Robert Reid says: “I think the FSA needs some surgery but it does not need to be killed in the process. Scrapping it would cause more indecision and more delay to the RDR.”

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. RDR
    If scrapping FSA means scrapping RDR I don’t think it can be done fast enough. RDR is mostly about charging the consumer for advice, which will make independent advise available to the more affluent people only and not for all. I am asking is TFC also only for the rich?? I am all for improving competency and professionalism, though.

  2. Simple solution to all this hot air
    File the RDR under ‘B’. I am disappointed with what some of these politicians are saying, they voted for all this after all is said and done. The financial services sector has been a political footbal for over two decades and still we get kicked around. Could we please have some balance and a stop to this constant change just for the sake of change?

  3. RDR chaos
    But the RDR is already imposing chaos so whats new. Practically every interference in the market that FSA has done has caused chaos – and I have seen no evidence that any of their activity has saved the consumer from one “detriment” or another

  4. Vince and the RDR
    I do not see that having the BoE regulate the banks for their basic strength and ‘systemic’ stability should impinge on another body regulating how they present and ‘sell’ their products to the public.

    The first is regulating banks balance sheets and the latter their retailing to the customer.

    I don’t think there is a problem Vince, but perhaps Adair and Hector have convinced you otherwise, I bet they have been lobbying hard, for their jobs! Or, heaven forbid, perhaps you are just trying to put clear water between yourselves and the Tories. The current govt. is a lost cause so better to use your energies attacking them. It may even bring in some votes from Labour supporters who have a problem voting Tory!

  5. Good or Bad
    No one seems to have paid attention to what has happened over the years since the Financial Services Act was introduced. People are not saving, advice is restrcited to the few that can afford to pay or where it is profitable for advisors to advise and the cost of products has gone up. Surely this should all indicate a total rethink. For those advisors who think that exams and professionalism are the way, this can be enshrined in som other form and most advisors will take up the education mantle anway. For Gods sake lets get some sanity back to this industry and start working for the good of the public and the country as a whole.

  6. Cunning Plan
    Chaos!!!!???. What the devil have we had for the last twenty plus years then. The way forward is to ‘keep it simple’, but then if that were the case a lot of poseurs in regulation would not be able to fanny around in their so called ‘jobs’

  7. FSA & RDR
    I cannot see how there would be chaos in implementation of RDR by axing the FSA. However I do believe that the FSA has become cumbersome with constant changes. However It has evolved in providing consumers greater protection than under the previous regimes of PIA/LAUTRO. The FSA needs to be aware that the wards of literature that is provided to consumers under the banner of consumer protection does not work and that there needs to be simpler way of delivering the message of risk/reward to consumers. I am also of the firm belief that BOE should remain independent of consumer protection and remain focused on systemic risk and controlling the financial institutions.

  8. THE FSA should go
    I think the FSA have treated IFA as an easy target for to long and have not hade the fight or the guts to deal with the real issue which has seen the country go into financial chaos and that is the banks. The FSA should go because they have failed our industry and the country. There incompetent meddling should loose them there jobs. They hand out fines and so they should but when they fail who fines them who sorts the FSA. The FSA with RDR are not asking the customer what they want and they insist we should have higher qualification yet they allow the CII to make money out of IFA by using the same old outdated exam process where questions are badly worded study material is poorly written and they give only 2 hours to complete a diploma exam when it should be 3 hours this means many older IFA fail several times just so the CII can have there re-sit fees so our industry gets smaller and smaller because we are totally demoralised. I do not disagree with improved knowledge but it is our compliance officers who check and correct our advice they protect the public not the FSA they just confuse the public and us.

  9. Effect on RDR of axing the FSA
    A switch to a new regulator would be very likely to extend the timetable for RDR – because of the need for planning of the new structure, legislation, relocation (and perhaps turnover) of personnel – or, more seriously, could bury the whole project if the new bosses of regulation take a different view to the FSA or are influenced by lobbying for vested, reactionary interests. If the industry wants to end this uncertainty and to be taken seriously by the public in the future it needs to take the initiative out of the hands of politicians and urgently implement the RDR measures itself.

  10. Disposing of the FSA
    I cannot believe anyone seriously thinks that scrapping the FSA would be bad because it might delay RDR. There is no genuine urgency to implement RDR and many with no axe to grind are querying the necessity for a number of the proposals included in the RDR anyway. It is not due to come to fruition for some three years or so-how can it possibly be regarded as urgent?
    The facts are simple-the FSA has failed in what most of us would see as its most obvious role; it has failed to regulate the banks.

  11. RDR Implementation
    Whilst most practitioners can find fault in some aspect of the RDR proposals most accept the underlying logic of its origins in ‘doing something’ to address the issues of falling consumer confidence, the savings gap, misselling and so forth. The RDR has been our opportunity to design our own future and, again, most practitioners accept there are some good bits.
    Irrespective of the politically inspired deck chair moving amongst the regulatory classes we really ought to grab hold of our own future by getting on with the ‘good bits’ – like changing business models and becoming more knowledgeable .
    It seems likely there will always be some kind of ‘regulatory tax’ on us (with both a financial and time cost) so, apart from supporting the good articulate people lobbying for commonsense, we can’t do much about it.
    There is no need to delay implementation of the RDR ‘good bits’ and, for those who just want to be left alone, there are probably a couple more years before its all too late!

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