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.”