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Financial reform: Govt sticks with early disciplinary disclosure plans

The Financial Conduct Authority will have powers to ban products for 12 months and be able to disclose warning notices of disciplinary action.

The Government’s latest consultation document, A new approach to financial regulation: the blueprint for reform, released this morning, also confirms the intention for the regulator to be able to take “credible and effective” action against misleading financial promotions.

The proposals were included in previous consultation documents but this paper sees them come closer to implementation due to their inclusion in a draft bill which amends the Financial Services and Markets Act 2000. The draft bill which will undergo 12 weeks of pre-legislative scrutiny which the paper says is expected to start before the parliamentary recess in mid-July.

The regulator will have to consult and publish a statement of policy laying out the circumstances under which it may make temporary product intervention rules – including banning products – which will last 12 months and allow it to judge consumer detriment caused by the product. The rules will not be able to be renewed without another consultation.

The draft bill confirms the regulator will have the controversial ability to publish warning notices about firms and individuals which signal the start of enforcement proceedings. At the time Aifa warned the new powers could signal “a worrying shift towards guilty until proven innocent”. FSA figures reveal nearly a third of enforcement cases in 2009/10 did not result in disciplinary action.

The Government says the regulator will have to decide whether publishing the early action would be unfair on the person or company involved.

The Financial Ombudsman Service will be given the power to publish individual determinations which it has not been able to do in the past.

The paper also increases the estimated cost of the regulatory changes on regulated firms from between £50 and £60m to as much as £100m. It says the revision is due to evidence from “a small number” of dual-regulated firms told them the costs would be higher than previously estimated.

It adds that the majority of firms will be regulated by either the Prudential Regulation Authority or the Financial Conduct Authority and that the transitional costs for those firms is expected to be “negligible”. The estimated cost to the taxpayer for the switch remains unchanged at up to £175m.

The paper rejects calls from the Treasury select committee for the FPC to have promoting competition as its primary objective. Instead the regulator will have a duty to carry promote competition unless it requires action which runs counter to the 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.


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Exasperated me 16th June 2011 at 1:55 pm

    Time to pack it in and work for a passported in firm based in another EEA state?

  2. All this coming out from the FSA and the Govenment is nothing to do with helping the consumer, it is all down to controlling the populous of this country by people who earn salaries beyond the wildest dreams of the majority of working population. Unless they keep making out they are doing good works they will never be able to carry on the lifestyle they have got used to. In addition to this, I would be very miffed to say the least, if they published by name
    and then it never went anywhere. Would I get compensation for the loss of my livelehood. Would they heck as like, they would find some spurious reason not to cough up-they are always right.. Even if they did decide to pay)pigs might fly) it would be the rest of the industry that would suffer with higher charges.

  3. So, estimated cost £50million, new estimated cost £175million, final cost £ ???

    And they preach to IFAs about how we should run our businesses and want to look at capping fees.

    You couldn’t make it up !!!

  4. Thousands of leeches all over Europe sitting around committee tables arguing about rules and regulations which they will use to beat us. They soak up vast amounts of money which, in the final analysis, comes out of the pockets of the investing public, and yet they achieve nothing. NOTHING. ABSOLUTELY NOTHING worth mentioning. If there was any fairness in this world, everyone employed to protect Joe Public from financial meltdown immediately before the credit crisis shone a light on the FSA’s incompetence, should now be on the dole with virtually no chance of being employed in a responsible position ever again !

  5. Come on guys, what’s £175million between friends, when it can keep unemployment figures down, and help to sustain one of the fastest growing organisations in the country, who are able to do such valuable work in telling IFAs how to run their businesses.

    And you must admit that the combination of unbridled power, unparallelled ignorance and complete isolation from the real world, is a pretty heady mixture.

    By the way, I assume they will be paying compensation for bad advice or mis-selling to the millions of people who,on the FSA’s advice, will fill their boots with what the FSA describes as “the safest investment of them all” – namely Government Stocks, which won’t prove all that safe when interest rates start to increase, and Gilt prices fall. But that will be different, of course. Why do the words “Sauce” “Goose” and “Gander” come to mind….?!

  6. What farce, these clowns sitting in their Ivory Towers churning out s—e after s—e.

    The civil servants teachers and local authority think they’re having a hard time it’s a piece of cake compared to what we have to put up with, they fortunately have a union we’ve got AIFA

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