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Govt urged to rewrite new regulator’s objective to focus on “fairness”

MPs and Lords have called on the Government to change the Financial Conduct Authority’s strategic objective from focusing on confidence in the financial system to fairness and transparency.

A joint committee made up members of the House of Lords and the House of Commons has today published its report on the draft financial services bill. The bill sets out the legislation for the new regulatory framework under the FCA and the Prudential Regulation Authority.

Currently the draft bill sets out the FCA’s strategic objective as to “protect and enhance confidence in the UK financial system”.

The draft also sets out three operational objectives of the FCA to secure an appropriate degree of protection for consumers, protect and enhance the integrity of the UK financial system, and promote efficiency and choice in the market for certain types of services.

However the current wording of the FCA’s objective has been criticised, as it could lead to the FCA looking to boost confidence in the system by hiding or downplaying cases of consumer detriment.

The FSA, the Independent Commission on Banking, and the Office of Fair Trading have all criticised the current wording saying it is unclear and does not accurately reflect the FCA’s responsibilities.

The report says: “The FCA’s strategic objective should be amended to focus on promoting fair, efficient and transparent financial services markets that work well for users. This would better reflect the Treasury’s intended purpose for the FCA, which is to ensure that business across financial services and markets is conducted in a way that advances the interests of all users and participants.”

The joint committee has also recommended for the FCA to have a clearer role in promoting competition, including the ability to make market investigation references to the Competition Commission and the power to hear super-complaints.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. This reminds me of an episode in ‘Yes Minister’ where in a period of 110 years the initial objectives of the ‘Dept of Administrative Affairs’ had changed completely so as to absolve the dept from having any responsibility whatsover to anyone.
    Surely a sustainable financial services which works to the benefit of the public & the industry must be desireable.
    If there is no benefit to the industry they will simply operate from elsewhere & the Uk will loose vast amounts of tax revenue

  2. Is that fudge I can smell ?

  3. “could lead to the FCA looking to boost confidence in the system by hiding or downplaying cases of consumer detriment” To which might well be added “as a result of its own ineptitude or behind the scenes influence from the government, from which it likes so often to claim independence (fsa.gov.uk).”

  4. “This would better reflect the Treasury’s intended purpose for the FCA, which is to ensure that business across financial services and markets is conducted in a way that advances the interests of all users and participants.”
    No chance as the first thing FCA will need to do in order to achieve this is acknowledge a longstop for advisers.
    The only other way of achieving fairness for all users and participants is to make the regulator eternally accountable and that is NEVER going to happen.

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