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MM Leader: We need a more accountable regulator

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.


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. This country is supposed to be a democracy.

    Having a hugely powerful institution without full accountability is undemocratic and is contrary to the British way, as stated by the country’s leaders over so many years.

    I would challenge any politician to actually come out and say that being anti-democratic is a good thing.

    It is an abomination.

  2. There are many problems with the FCA setting its own bechmarks.

    Firstly, it’s in its own interests to be seen as successful and the pressure to be seen that way will; place a pressure on them to cast a rosy tint.

    Secondly, its mathematical ability is in serious question judging by the nonsense that informed the RDR policies.

    Thirdly, as Patrick so aptly pointed out, a true democracy would ensure a sustem of checks and balances which would remove the suspicion of interference or spin.

  3. RegulatorSaurusRex 23rd November 2012 at 4:28 pm

    I am an extinct regulator, however I would contend that the regulated should be more accountable.

  4. The FSA’s Angela Merckel lookalike is quoted as saying “It doesn’t feel from the FSA’s perspective as if we are going to be any less accountable”.

    Any less accountable than what? How can an organisation be any less accountable than totally unaccountable?

  5. With more breaches in law than Vlad The Impaler, the FSA’s rumination about accountability is somewhat sickening. The ‘corpses’ are there for all to see…. unless you are in the executive suite at canary towers, where all you see are your bonuses for abject failure, crammed into your pockets at the expense of the ‘victims’ you purport to ‘regulate’. Kerrchinng and devil take the hindmost.

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