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OFT criticises champion role for CPMA

The Office of Fair Trading has hit out at the Government’s plans to shape the Consumer Protection and Markets Authority as a strong consumer champion.

At a conference held by thinktank Reform in London last week, OFT chief executive John Fingleton said although the new regulatory body should be consumer-focused, this does not necessarily mean it should be fighting for consumers’ rights.

He said: “The reform should be focused on making the market work and also encouraging confidence in the system as a whole, so I do not see any conflict between the CPMA’s regulatory role and its consumer focus. That said, I do not think the CPMA should be cast in the role of consumer champion. There is no shortage of organisations such as the Citizens Advice Bureau and individuals such as Martin Lewis who are doing that work and championing consumer interests already.”

Fingleton’s comments contrast sharply with the Government’s stated objective for the CPMA.

In the Treasury’s consultation paper on reform of financial services regulation, published in July, the Government said the CPMA “will be a strong consumer champion” to ensure consumers are “placed at the heart of the conduct regulatory system and given the appropriate degree of priority.”

Treasury financial secretary Mark Hoban echoed this sentiment in his keynote speech at the Reform conference. He said: “Alongside a more secure regulatory base, we need a financial centre that works for consum-ers, one that earns their conidence and keeps them properly informed. That is why we are setting up the new CPMA. The CMPA will look at the conduct of authorised firms, whether prudentially regulated or not. It will, in effect, be a champion for the consumer because its primary objective is to ensure confidence in financial services.”

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  1. The usual platitudes from Mark Hoban but, as usual, they comprise generalised aspirations with no detail.

    In what way will the CPMA “keep them [consumers] properly informed”? Informed about what and in what ways? Is there any clamour from consumers to be kept better informed of what the regulator gets up to? All consumers want is to know that the regulator is fulfilling its statutory obligations and doing its job so that another near meltdown of the banking system is avoided.

    In what way will this new “secure regulatory base” earn the confidence of consumers? In what ways will it “look at the conduct of authorised firms” that the FSA doesn’t already? Given that the majority (if not all) of the staff and directors of the CPMA is going to be ex-FSA people, from where are all these grand new ideas going to come? Does Mr Hoban have up his sleeve some fabulous new master plan that’s going to revolutionise the way in which regulation works? How about some details, Mr Hoban?

    Is there, for example, going to be a (many would say much needed) revisitation of the FSMA 2000 on any parameters other than granting the regulator in its new guise even more powers, more resources and, as ever, more money?

    Is there going to be any levelling of the playing field between the banks and the IFA sector? Are IFA’s going to be granted the protection of the Law of the Land in the form of the 15 year longstop for complaints? Or will that continue to be denied on the grounds that the FSA/CPMA “sees no benefits to consumers” by restoring it? What about instituting a proper balance of benefits between consumers and advisers?

    Will the CPMA be obliged to observe the provisions of the Statutory Code of Practice for Regulators? Or will that continue to be quietly ignored and unenforced?

    Will the CPMA be subject to external supervision of the way in which it manages its resources? Or is Mr Hoban quite unconcerned about the regulator going £14m into the red with the very banks that it failed to regulate so it can pay its staff and directors £21m in bonuses? Perhaps if the FSA was doing its job properly in terms of regulating those very same banks, they would have been less willing to facilitate that £14m overdraft.

    This whole initiative is slanted against the interests of the IFAdviser community. It’s all hot air without either detail or accountability. The TSC is now demanding clarification from the FSA as to just how it envisages the RDR resulting in a better market place for consumers. The OFT is raising criticisms of its own. A large proportion of the adviser community is highly critical of the FSA in general and of the RDR in particular. MP’s are voicing these concerns in Parliament. But Hoban remains deaf and blind to all of it.

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