View more on these topics

Practitioner Panel warns FCA will be able to ignore it

The Financial Services Practitioner Panel is warning that the Financial Conduct Authority’s duty to consult the industry will be undermined by the removal of a requirement for it to explain any rejection of recommendations the panel makes.

In a note to the Parliamentary committee currently looking at the financial services bill, the FSPP also calls for the Treasury or the Treasury select committee to watch rising regulatory costs and for the Prudential Regulation Authority to be required to have a practitioner panel.

Under current rules the FSA “must consider representations” from regulatory panels and respond in writing explaining why any recommendations are being rejected. Under current proposals, the duty for the FCA to consider panel representations remains but the regulator will only be required to publish a response “in such a manner as it thinks fit”.

In a submission to the committee currently scrutinising the Financial Services Bill, the practitioner panel says the wording risks the FCA ignoring it and the other regulatory panels.

It says: “We believe that under the new legislation, the FCA could choose to ignore certain suggestions from the panels. We would like the bill amended so if the FCA disagrees with a view expressed, or proposal made in a panel representation it must give that panel a statement in writing of its reasons for disagreeing.”

Its submission adds that weakening the role of the practitioner panel risks “sidelining” the people who are best placed to analyse whether regulatory policies are working.

The panel warns that despite a likely increase in the cost of regulation for firms as a result of the new regulatory set up and recent “significant cost increases” to Financial Services Compensation Scheme and Money Advice Service contributions, no organisation is responsible for reviewing the cumulative impact of rising costs.

It says: “We believe that the Treasury or Treasury select committee should have responsibility to consider the justification for the overall cost and burden on industry from regulatory requirements.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Forget the RDR, forget the FSCS, forget the FOS you can even forget the expensive gardening leave, 5 star hotels and works of art in the Canary Wharf reception.

    Accountability – or lack of – is the partially hidden but simmering danger to all of us.

    Unshackled power in the hands of those who carry no personal responsibility for their actions is a dynamite keg that will explode sooner rather than later.

    The TSC has seen this danger. The national press needs to focus minds on this imminent danger before it’s too late.

    Remember 1938 and Churchill?

  2. Lack of accountability is arguably the biggest single concern about the UK’s current regulatory structure. Merely requiring the FCA to explain its reasons for rejecting a proposal from the industry won’t address the problem.

    Whereas the FSA enjoys the freedom currently simply to reject a proposal on the grounds that it doesn’t agree with the premise on which it’s based, what difference will it make if its successor is required to explain why? The FCA will simply say This is why. End of. Now go away.

    The only thing that WILL make any meaningful difference is the creation of an Independent Regulatory Oversight Committee with the power to challenge and, if appropriate, to overrule the FCA’s reasons for rejecting a proposal and direct it [the FCA] to take them on board. This will mean not just taking another look at the proposal and then coming back with exactly the same rejection, as did the FSA, with impertinent swiftness, in response to the TSC’s request that it take another look at the requirements of its RDR.

    This appears to be what Andrew Tyrie is striving to achieve, though it has to be said that he’s up against it, in light of the government having already declared that the FCA, like the FSA before it, will be accountable only to its own board.

Leave a comment