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.”