The FCA has clashed with the Treasury by calling for the approved persons regime to be abolished for all regulated firms including advisers.
Speaking to the Treasury select committee this week, FCA director of supervision Clive Adamson said the regulator did not agree with Treasury proposals to introduce reforms just for banks.
In the Banking Reform Act 2013 the approved persons regime is being abolished for deposit-taking institutions and some investment firms.
It will be replaced with a tougher senior persons regime and a certification scheme for junior staff. The reforms are based on proposals put forward by the parliamentary commission on banking standards.
The changes do not apply to the rest of the regulated sector including advisers.
TSC chair Andrew Tyrie, who also chaired the banking commission, is pushing for the approved persons to be abolished for advisers as well.
He asked Adamson why the approved persons regime is unfit for purpose for banks but fit for purpose for the rest of the regulated sector.
Adamson said: “We have been improving as best we can the operation of the approved persons regime for other firms. We would have preferred the new regime to apply to all financial services firms.”
Tyrie said regulators now need to set out how they will expand the “discredited” approved persons regime beyond banks. Advisers have previously raised concerns that expanding the regime would amount to regulatory “overkill” and extra costs.
Former FSA head of ethics David Jackman says: “We should treat advisers as seriously as we take bankers. The approved persons regime has been a weak link for a long time, running at high cost for limited benefit.”