The Government should force the FSA to resume its Financial Services Compensation Scheme review if the European Union fails to finalise the investor compensation scheme directive by December, says LibDem peer Lord Teverson.
In June, the FSA said it will not push forward with its review of the FSCS until the EU directive is complete.
The European Parliament passed its amended version of the Commission’s proposal in June and the European Council must now publish its version before the three enter discussions to finalise the directive. An EC spokesman says the directive is “not being treated as a priority”.
Speaking to Money Marketing, Teverson, who is vice-chair of the associate Parliamentary group on wholesale financial markets and services says the current model is “severely wrong” and must be addressed. He says: “If Europe does not sort this by the end of the year, the Government should compel the FSA to move ahead with its review. It is too easy to put things off because decisions are being made elsewhere.
“We need to make sure that where there is regulatory failure, every other firm in that sector is not hit with an almost limitless liability that is hard to predict and manage.”