Chancellor George Osborne has promised tough new rules which shift responsibility from the FCA to firms’ senior managers will be applied proportionality to advisers.
Last week, the Treasury announced the senior managers regime will be extended to all regulated firms at some stage during 2018.
This means individual businesses, rather than the FCA, will be responsible for for ensuring staff are fit and proper. The rules are designed to make it easier for the regulator to hold senior managers to account in the event of failings.
However, experts have warned the changes will add tens of thousands of pounds in compliance costs to each firm and could lead to staff demanding higher salaries.
Speaking to the Treasury committee earlier today, Osborne said: “How [the senior manager regime is] applied will be a matter of judgement, but a big systemic bank is going to have greater attention than a small firm of investment advisers. We would expect to see it applied proportionately.
“A test of the overall series of changes to the way we regulate financial services should be whether our regulators are exercising judgement.”
He added: “If we didn’t extend the regime we would have had an odd situation where a small building society could have this regime and a large investment firm could not, when the consequences of the failure of the investment firm may be greater than the failure of the building society.”
Osborne also confirmed he intends to extend the Bank of England and the Financial Policy Committee’s existing powers on mortgages to include the buy-to-let market.
He said: “The governor of the Bank of England and the FPC have asked for the additional powers and we are in the process of granting those.”
Quizzed on the appointment of a successor to former FCA chief executive Martin Wheatley, Osborne said the Treasury has already received “a lot of really good applications for the job”.
He said: “On the basis of the applications that we have had for the job, that justifies the decision to look further afield for a candidate.”