FSA chief executive Hector Sants says the Consumer Protection and Markets Authority needs decision-making powers that bypass the consultation process if it is to be effective as a consumer champion.
At a conference held by thinktank Reform in London last week, Sants said the FSA’s powers to intervene to protect consumers were essentially retrospective. He said to prevent consumer detriment, the regulator draws up rules and those rules are subject to a consultation process and justification through costbenefit analysis.
But he added: “If you want a proactive consumer champion, which is an interesting question in itself, that means you need to intervene earlier in the chain. Therefore, you need an executive decision-making power more akin to what a prudential regulator already has.”
Sants said the FSA does not have executive decision-making processes to deliver a proactive consumer regulator.
He believes this issue needs to be addressed or the CPMA will not be able to meet its objective of championing consumer rights.
Sants said: “The CPMA needs executive decision-making powers to intervene in a product-specific way or it will not be able to discharge the expectations that I think are being laid upon it.”
Bank of England deputy governor for financial stability Paul Tucker said the Prudential Regulation Authority, which will be a subsidiary of the bank, would not carry a consumer mandate and would leave that aspect of regulation to the CPMA.