Conservative Shadow Treasury Financial Secretary Mark Hoban has warned that a move towards product regulation could harm competition and innovation.
At the Tenet annual conference in London last week, a delegate asked Hoban if a move to product regulation was needed due to recent regulatory failures.
The delegate said: “We have tried advice regulation for three decades now, it has not worked. Let’s move on. What we really need is regulation where the product itself gets regulated and rubberstamped.”
But Hoban said: “If you have products kitemarked, it gives consumers more confidence. But equally what we do not want to see is the process for innovation and competition in the financial services market unnecessarily harmed by product regulation because it could act as a brake on innovation. We need to think quite carefully about how it would work.” The delegate suggested that if providers wanted to work outside a product regulation regime, then caveat emptor should apply.
But Hoban said: “I do not think there is an appetite more broadly to move back to caveat emptor for non-standard products. There is not much support for that among regulatory and policymakers.”
He reiterated Tory plans to continue the implementation of the RDR if they win next year’s general election.
He said: “When we announced our plans to scrap the FSA, there were some questions of will this affect the timetable of the implementation of RDR. I do not believe these reforms to the regulatory structure need to impact the timetable of the RDR. To allow that process to be disrupted will be detrimental to the industry and consumers.”
Hoban aired concerns over the recent failings in the structured product market. He said marketing material for the Lehman-backed products was “misleading” and failed to refer to the real risks involved for investors.