Prudential Regulation Authority chief executive and Bank of England deputy governor Andrew Bailey has admitted the FSA lacked accountability and clear objectives.
Speaking at the Lansons Communications Future of Financial Services conference in London last week, Bailey said the scrapping of the FSA and the creation of the Financial Conduct Authority and the PRA represents a “profound” regulatory change.
He believes a lack of regulatory accountability was part of the reason the FSA did not succeed. He said: “The challenge we have is in getting a clear public policy objective to stick. The only way we can do that is by having very clear objectives from parliament and clear accountability to parliament. The FSA, did not succeed in that respect and did not have clear objectives.
“In a sense, the conclusion is it had too many objectives and it did not have a clear line of accountability to parliament. If you do not have those things in place then you are far more at risk of failing. That is the real lesson in terms of what worked and what did not.”
Bailey said the new regulators do have clear objectives but regulatory accountability still needs to be strengthened.
Aurora Financial Planning chartered financial planner Aj Somal says: “The FSA’s remit was too big – it bit off more than it could chew. The pressure is now on for the new regulators to deliver a more focused approach.”