View more on these topics

MP raises fears over FCA prudential expertise

Conservative MP Mark Field says it is of “enormous concern” that the Financial Conduct Authority will carry out prudential regulation of investment firms similar to Arch cru, Keydata and MF Global, warning it will not have the expertise required.

Under the new regulatory structure, the FCA will be responsible for the conduct and prudential regulation of 24, 496 investment firms.

Speaking in a debate on the Financial Services Bill in the House of Commons this week, MP for the Cities of London and Westminster Field said the recent failures of Arch Cru, Keydata and MF Global demonstrates the need for “proper regulation of firms with sizeable assets that are engaged in complex activities”.

He said: “The FCA is set to be a competent financial conduct regulator but it is no secret that it is not an expert prudential regulator. The prudential experts will all be located in the PRA.

“That is fine when the firms that are prudentially regulated by the FCA are small and relatively straightforward with few systemic risks but none of the three firms to which I have referred can be regarded as small or straightforward businesses. This situation is an enormous concern. Firms are facing increased liabilities through the Financial Services Compensation Scheme and the future structure of the supervisory regime does not suggest that prudential regulation of these firms is likely to improve.”

The Treasury has dismissed Field’s concerns, saying measures have been “hardwired” into the bill to ensure effective co-ordination between the two bodies.

A spokesman says: “There is a statutory duty to coordinate, cross-membership of boards and specific requirements to consult in respect of specific regulatory processes.”

Investment intermediaries were hit with a £60m FSCS interim levy last month for 2011/12, which included compensation costs of MF Global, Keydata and CF Arch cru. Keydata and CF Arch cru costs also contributed to the estimated £33m annual levy on investment intermediaries for 2012/13.

Derbyshire Booth Financial Management managing director Greg Heath says: “Poor prudential regulation of these firms will push up FSCS costs even more, which already punches a big hole in firms’ finances.”

Last month, Field tabled an amendment to the Financial Services Bill that would have forced the FSA to pay for section 166 reports and only levy firms if the findings lead to enforcement action. The amendment was not selected to be voted as part of this week’s Parliamentary debate. Earlier this month, Aifa raised concerns the FSA is increasingly forcing IFA firms to undertake the skilled persons reports, with 95 s166 notices issued in 2009/10, costing firms £32.2m.



LV= recruits Katherine Oxenham from Annuity Direct

LV= has appointed Katherine Oxenham as business development manager within its retirement solutions business. Oxenham joins the provider from Annuity Direct, where she was financial planning director. She will report to LV= head of distribution Steve Lewis. Lewis says: “With Katherine’s extensive experience as an adviser, she will play a key role in supporting LV=’s […]

Cofunds profits fall 10% as assets increase by 17%

Cofunds has posted a 10 per cent fall in profits, down to £7.1m from £7.9m in 2010. The platform’s annual results, published last week, show assets under administration rose by 17 per cent to £36bn, up from £30.3bn. Cofunds is due to launch its unbundled charging structure in July. The platform was the first to […]

BNY Mellon appoints global head of distribution

BNY Mellon has appointed PeterPaul Pardi as global head of distribution for its investment management business. Pardi has more than 20 years of client and business development experience, primarily in financial services and asset management. He was previously the executive director, global head of institutional investment placement, for Arcapita, a global private equity firm. He […]

Newcastle BS cuts interest-only max LTV to 50%

Newcastle Building Society has reduced its maximum loan-to-value for interest-only lending from 75 per cent to 50 per cent. If interest-only is selected, borrowers cannot pass the 50 per cent LTV cap even if the remainder of the loan is on a capital repayment basis. The building society says it took the decision as a […]


News and expert analysis straight to your inbox

Sign up


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

  1. The problem appears to be that no one in regulation really seems to know what they are doing. Just because these people missed KIS, Arch and all the others last time doesn’t mean they are any more likely to spot the next one. Would you bet on a horse that had lost every race?

    The initials above the door are irrelevant. ALL of our regulators have shown themselves to be incompetent and unaccountable.

  2. I have been in the Finance areana for 43 years now.
    I would like the job please.
    Please draw up a 3 year contract @ say £3m per year, plus benefits, make it £10m.
    I can start as soon as needed.
    Of course this will never happen because I did not attend Eton and Oxford. So some twunt with no experience will be getting it.
    All a big joke really.

  3. I think it was Einstein who said the definition of madness is to repeat previous mistakes and expect a different outcome. No doubt when the first the first crisis hits us after twin peaks day, they will say “based on the evidence before us in 2013, we had no reason to think this could happen”. This is a common statement when the wrong people do the wrong job and are not qualified (by experience I may add – not exam qualified) to do the work that is expected of them.

  4. If an advisory firm made a hash of its business and closed down to start up the following day under a different name there would be allegations of phoenixing!

  5. Casual Observer 26th April 2012 at 3:10 pm

    @Marty 10.32 – the FSA and FCA will be the most qualified people that you could hope for based on experience – unfortunately that would be the experience of consistently getting it wrong. We need some people who can consistently get it right!

  6. @ Casual Observer.
    We would settle for having people in the regulator who could get it right occasionally, as even a mediocre performance would a vast improvement on the past few years of total shambles.

Leave a comment