Under the current rules, the FSA must gain approval from the Treasury and both the houses of Commons and Lords before it can order a widespread review.
Lansons director of regulatory consulting Richard Hobbs says the new proposals on consumer detriment would give the FSA the power to order a generic review of past business without consulting Parliament. He says the reviews could be costly for IFAs.
The Lords’ amendments to the bill are due to be considered in the Commons this week and the bill will have to be finalised by Monday, April 12 when Parliament is dissolved.
Hobbs says the Conservatives are unlikely to prevent the bill from becoming legislation to avoid being labelled anti-consumer. He says: “This is seen as a pro-consumer measure and in the run-up to the general election, none of the parties wants to appear to be anti-consumer.”
Royal London head of corporate affairs Gareth Evans says the FSA stands to gain a number of new powers under the bill but warns: “It is not clear what checks and balances will be in place to accompany them.”