The Financial Conduct Authority will have powers to ban products for 12 months and be able to disclose warning notices which signal the start of enforcement proceedings.
The Government’s latest consultation document, A new approach to financial regulation: the blueprint for reform, released last week, also confirms powers to take “credible and effective” action against misleading financial promotions.
The draft bill, which amends the Financial Services and Markets Act 2000, will undergo 12 weeks of pre-legislative scrutiny which could see substantial changes made.
Temporary product intervention rules, which would have to be consulted on, could last up to 12 months and would not be able to be extended without further consultation.
The draft bill confirms the intention for the regulator to have the controversial ability to publish warning notices signalling the start of enforcement proceedings. FSA figures reveal nearly a third of enforcement cases in 2009/10 did not result in disciplinary action.
The regulator will have to consult with the firm first but the minimum period for firms to make a representation regarding enforcement action will be cut from 28 to 14 days and decide whether publishing the early action would be unfair on the person or company involved.
The paper rejects calls from the Treasury select committee and the Independent Commission on Banking for the FPC’s remit to be defined in terms of a primary competition objective. Instead the regulator will have a statutory duty to promote competition unless it runs counter to its primary, strategic objective of protecting and enhancing confidence in the UK financial system. It will also have three operational objectives to consider: securing an appropriate degree of protection for consumers, protecting and enhancing the integrity of the UK financial system and promoting efficiency and choice in the market.