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Consumer Protection and Markets Authority to regulate all authorised firms

Chancellor George Osborne has announced plans to set up a “powerful” new Consumer Protection and Markets Authority to oversee IFAs and regulate their conduct.

Speaking at Mansion House last night the Chancellor said the new body “will regulate the conduct of every authorised financial firm providing services to consumers. It will also be responsible for ensuring good conduct of business in the UK’s retail and wholesale financial services, in order to preserve our reputation for transparency and efficiency as well as our position as one of the world’s leading global financial centres.”

In addition to the Consumer Protection and Markets Authority an independent Financial Policy Committee at the Bank of England overseeing macro-prudential regulation will be set up. A single agency responsible for tackling economic crime will also be created.

The government has decided to abolish the existing tripartite regulatory system made up of the Treasury, the Bank, and the FSA in favour of handing regulatory power to the Bank.

As a result the FSA will cease to exist in its current form.

In response to the reforms chairman of the FSA Lord Turner says: “The FSA now has the clarity of direction and timescale as well as the leadership that we need to meet the challenges ahead.  

“On retail customer protection, the FSA has recognised the need for a shift in our past approach, moving to the more interventionist approach which we set out in our recently published retail conduct strategy.   The new Consumer Protection and Markets Authority will have a strong focus on this challenge, while also maintaining strong focus on conduct issues in wholesale products.”

Turner says aspects of regulation such enforcement activity are still to be resolved.

He adds: “But the overall future shape of financial regulation is now much clearer and we are in a strong position to create a future regulatory system which builds on the FSA’s achievements over the last few years of major change.”

Bank governor Mervyn King welcomed the central bank’s new powers last night.

King said: “The Bank of England cannot effectively perform its role as lender of last resort without first-hand knowledge of the health of the banks to which it might provide support. In peacetime, regulation can be conducted outside the central bank. But in a crisis, decisions must be made quickly and decisively and the central bank, working with government which is always responsible for any use of public money, needs to be in charge.

“We shall aim to avoid an overly legalistic culture with its associated compliance-driven style of regulation. That is an important reason for the separation of consumer protection and market conduct from prudential regulation.

“We must reverse the seemingly inexorable trend towards more regulation and more regulators. That did not work in the past and is not the right response now.”

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. This bit worries me –

    “We shall aim to avoid an overly legalistic culture with its associated compliance-driven style of regulation. That is an important reason for the separation of consumer protection and market conduct from prudential regulation.

    I can only interpret that as meaning that the consumer protection bit WILL still be overly legalistic and compliance driven??

  2. Manchester Cynic 17th June 2010 at 9:44 am

    Still plenty of time for the IFA population to be decimated and the small clients who aren’t “commercially viable” to be thrown to the wolves (sorry, banks) wholesale by RDR. Oh, and who will be running and working for this new CPMA – could it possibly be the same people we suffer under now?

  3. Alasdair Sampson 17th June 2010 at 10:20 am

    The more things change, the more they stay the same.

    The reference by Mervyn King to avoiding “an overly legalistic culture with its associated compliance-driven style of regulation” is in relation to the sector of the financial services market the BofE will be taking back ie the banks etc.

    I love the other part of his statement – “We must reverse the seemingly inexorable trend towards more regulation and more regulators. That did not work in the past and is not the right response now.”

    If the consumer lobby thought for a nano-second that this applied to the retail market, where you guys live, they would be all over Osborne/Cable like cheap wet suits.

    Does anyone really think that the consumer lobby will agree to what they will see as a lessening of the controls on IFAs and a return to the good ol’ days of investment free for all? Get real Mervyn!

    The consumer lobby will also resist any change to the current FOS set-up that enables Joe Public to suffer selective amnesia when complaining and simply collect a cheque.

    You can bet your bottom dollar that whatever change of name there may be on the tin the paint inside will be the same colour, viscosity and use.

    And who will be the painters? The same guys who are there just now.

    You really think anything will change?

    Dream on.

  4. The country faces a deficit of unimaginable proportions yet all we have seen so far is a rehash of the same regulators who got us into this mess in the first place.

    The real crooks are busy feathering their nests yet again, the banks and the insurers have such a stranglehold on the government you wonder how soon the lot of them can be broken up so we can get back to basics.

    Yes Paul Harding, you are right to be worried. And that body will only have you to concentrate on, but then again the FSA always focussed on IFAs while the banks robbed the old and infirm, and anybody else ignorant enough to listen.

  5. Might I bring to the agenda of this (yet another) all powerful consumer body that from now on ALL new products that we IFAs are authorised to sell and recommend are first approved rather like NICE in the drug industry and likje the food standards agency that investment products be risk rated simply Red, Amber and Green.

  6. Why not retain the name of the FSA, but just change the mandate under which it operates. That way IFAs and Product Providers will not have to spend unnecessary amounts of money on re-printing all documentation, just because Mr Osborne has decided that he wants to change the name. This also to come at a time when many businesses are already under pressure with RDR looming. Time to have a re-think Geroge, unless the government are going to pick up the tab (yeah right!).

  7. Boy George talks grandly of “our reputation for transparency and efficiency”, though no mention seems to be made of ensuring that these qualities will be imbued in the new regulatory landscape now being mapped out, not least on the part of the CPA.

    The FSA, like the PIA before it, has shamelessly lacked both transparency and efficiency, so these should be watchwords for whatever new body is to be created. Hence my calls for the creation of an Independent Regulatory Standards Committee.

    The new government must take into account the fact that any organisation granted power without accountability is a very unhealthy one. The damage caused thus far by an unaccountable regulator is plain for all to see. That has to change.

  8. Ms Janice Matthew 13th July 2010 at 3:17 pm

    I was sold a HIPs in October 2009. The HIPs report was only completed in June 2010; after the period that it had been abolished.

    I have paid in advance the full cost for the HIPs report. Bearing in mind the Estate Agents must have been aware of the immiment termination of this report do I have any grounds for a partial refund and the fact that the HIPs was only completed after the report had been abolished and no report was ever sent to me?

    I have paid for something that I never ever received and is of no use to me.

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