As the bill to create the new financial regulators continues its passage through Parliament concerns remain over the extent to which they will become both more powerful and less accountable than their predecessors.
This week’s call from FSA prudential head Andrew Bailey for the Treasury select committee to be given the power to force regulators to conduct reviews and hand over information is a welcome intervention. However, a number of worries persist.
Concerns around the ability of the FCA to publish early warning notices on firms have been met by a weak amendment from the Government while calls from MPs for the FCA to be forced to publish its board minutes have so far been ignored.
In this week’s issue, Association of professional financial advisers deputy chairman Gary Bottriell and policy director Chris Hannant outline a number of issues which typify a dangerous softening of regulatory accountability.
Bottriell, an IFA who is also a member of the Regulatory Decisions Committee, is worried the bill will water down the rights of firms and individuals to challenge FCA decisions.
At present, if you are unhappy with an FSA decision, you can appeal to the RDC. If you are unhappy with the RDC decision, you can go to the Upper Tribunal which can uphold or overturn the regulator’s decision.
As it stands, the Upper Tribunal will no longer have the power to overturn certain FCA decisions, such as rulings on authorisations and banning orders. Bottriell is also worried the bill leaves the door open for the independence of the RDC to be compromised in future.
Writing in this week’s Money Marketing, Hannant highlights that the FCA intends to set the benchmarks and methods for measuring its own success or failure.
This is hardly a shining example of good governance. As Hannant points out, it is usual for an organisation to have its goals and success indicators set by those it is accountable to.
If the FCA fails to beef up its own accountability procedures Apfa is preparing its own scorecard which it believes will properly measure the performance of the regulator from an adviser perspective.
Such a move should be warmly welcomed by all advisers and their clients who ultimately pay the regulator’s wages. However, it is troubling that we are likely to require a trade body to put in place best practice governance processes that the FCA should be doing itself.