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FSA disappointed by plea-bargain delays

The FSA has hit out at the Government for dragging its feet in sanctioning the new plea-bargaining powers the regulator will be given to help curb market abuse.

Chancellor Alistair Darling agreed in March to give the FSA the extra powers, similar to those used in the US, but FSA chairman Sir Callum McCarthy told the Treasury select committee last week this had “not yet happened”.

Chief executive Hector Sants said the regulator was disappointed that a timetable had not been set. He said: “Given the importance that we attach to this issue, this is disappointing.”

TSC chairman John McFall said he understood there was a seizure in getting the legislation implemented. He said he would write to the Chancellor asking for details.

McCarthy insisted that the FSA is determined to make more prosecutions for insider dealing. He said the FSA had more than doubled the number of staff in this area from 12 to 30 and improved technology but said the additional powers are “essential” if it is to make the step-change it believes is “very necessary”.

The decision to give the regulator new powers was made after rumours about HBOS’s funding saw its share price drop dramatically earlier this year.

Director of enforcement Margaret Cole told the TSC the FSA planned to concentrate on criminal cases rather than civil. She said: “Criminal cases act as a significantly greater deterrent.”

Sants said he wanted to “remove the misconception” that the FSA was a light touch.

McCarthy told the TSC he was “very confident” that smaller building societies would benefit indirectly from the Bank of England’s 50bn liquidity injection through “a transition mechanism”.

Sants said the FSA had improved its IT system which would now allow Bank of England staff to have the same access to data as those working for the regulator. He said: “It would become, in virtual terms, one department.”


Absolute beginnings

After months of consultation, the Investment Management Association has started an absolute return sector for funds that target positive returns in all market conditions. It initially comprises 17 funds, of which five are UK-based.

Against the grain

The FSA’s interim report on the RDR aims to boost consumer confidence in the retail financial products market by marking a separation between sales and advice. The argument that these changes are necessary to allow customers to tell the difference between advice and selling is spurious. The market has been operating for 20 years with tied and independent advisers distinguishing themselves with mandatory disclosure without evident problems.


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