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LibDems join call to rewrite the FSMA

Liberal Democrat Treasury spokesman Lord Newby has joined the Treasury select committee and Labour MPs in calling for the Government to rewrite rather than amend the Financial Services and Markets Act.

In June, the Treasury published its draft bill which will amend the Financial Services and Markets Act 2000 and split the FSA into the Prudential Regulation Authority and the Financial Conduct Authority.

In March, Treasury select committee chairman Andrew Tyrie said amending the FSMA could leave “operational flaws” in place.

In May, Labour Shadow Treasury financial secretary Chris Leslie said this approach would make it more difficult for people to follow the scrutiny of fundamental changes through Parliament.

Speaking to Money Marketing, Newby said: “In an ideal world, there would be a new bill. These are technical issues and there is a danger if you have an original text that is amended that it can be difficult for practitioners to find their way through it.”

The Treasury says writing a new bill would be more time-consuming and disruptive and costly to firms.

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Comments

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

  1. Julian Stevens 15th July 2011 at 1:00 pm

    If rewriting the FSMA properly, from scratch, results in a better framework than what we have already, then most of the industry, I suspect, would consider such an outcome to be well worth the extra time and a modicum of additional cost.

    The FSMA 2000 is widely held to be bad law and clearly grants the FSA virtually free licence to pursue whatever agenda it fancies without reference to anybody else. It also allows the FSA to deny IFA’s the protection of English Law in the form of the 15 year Longstop against stale complaints. If those things aren’t in need of changing fundamentally, then I don’t know what are.

    If nothing else, a new FSMA should also incorporate the creation of an Independent Regulatory Oversight Committee with the power to block FSA/FCA proposals that constitute a breach of the scope of its powers. It should also specify that the FCA MUST adhere both to the letter and to the spirit of the Statutory Code of Practice For Regulators which manifestly it presently doesn’t ~ despite it being law.

    The Regulators’ Compliance Code is a central part of the Government’s better regulation agenda. Its aim is to embed a risk-based, proportionate and targeted approach to regulatory inspection and enforcement among the regulators it applies to [including the FSA]. Our expectation is that as regulators integrate the Code’s standards into their regulatory culture and processes, they will become more efficient and effective in their work. They will be able to use their resources in a way that gets the most value out of the effort that they make, whilst delivering significant benefits to low risk and compliant businesses through better-focused inspection activity, increased use of advice for businesses, and lower compliance costs.

    The FCA should not be permitted to continue to ignore the Code and a wholesale re-writing of the FSMA could well prevent it from doing so.

  2. Well said Julian why not offer to help them?
    At least you know what the real issues are, unlike the politicains who have no idea what it is like to be controlled by an unelected, unaccountable Quago with unbridled powers.

  3. I agree with Julian. If you listen to Hector Sants grilling with the TSC (back in March I think it was), Hector Sants basically said rewriting FSMA rather than tweaking and renaming to the FCA was probably more appropriate.

  4. I remember the debate between self-regulation and statutory regulation. As an office junior, my ‘vote’ for statutory regulation was shouted down over 30 years ago: but I was right. Choosing the soft option led to mis-selling scandals and a self-justified and self-empowered regulator. If something is wrong, it should be made a crime – that might have got banking auditors to do their job. We live by the general law of the land because it applies to everyone and it is widely known. Would that law applied to financial advice and not regulation. After nearly 40 years the regulations are more complex, less unanimous and no longer connected to the daily threat and innuendo applied by the City Stazi.

  5. At last common sense from a politician, I may even vote Lib Dem after 45 years of voting for the Conservatives!

  6. Michael Fallas 15th July 2011 at 5:23 pm

    They will never find the Parliamentary time to do it.

    They have so many other problems to deal with thanks to previous Governments being incompetent we are all now paying the price and for decades to come too.

    One could argue that our politicians should pass exams to help avoid expensive mistakes but we don’t live in a country with a fair system for all do we?

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