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Tories plan to scrap FSA – new body would regulate advisers

The Conservative party has called for the abolition of the FSA with prudential powers passed to the Bank of England and a new body set up to regulate advisers.

Shadow Chancellor George Osborne has set out plans to abolish what he says is a “failed” tripartite system of regulation and give the Bank of England responsibility for maintaining financial stability.

Under the proposals, IFAs and mortgage brokers would be regulated by a new entity – the Consumer Protection Agency.

In their White Paper, published today, the Tories say: “The CPA will take a much tougher approach to consumer protection and will be given a mandate to act as a consumer champion. It will be a far more consumer-orientated, transparent and focused body than the FSA.”

The CPA would have the power to name and shame firms who break the rules.

Regulation of consumer credit would be transferred from the Office of Fair Trading to the CPA.

The Conservatives would consult on which regulatory authority should take on the FSA’s various other responsibilities including markets and securities regulation, ‘approved persons’ licensing and listing authority responsibilities.

They say markets regulation could be combined with the Takeover Panel and Financial Reporting Council to streamline the number of regulators and create a powerful markets authority similar to many European countries.

The Tories’ Bank of England would have the power to regulate the pay structures, risk, complexity and size of financial institutions, and require those with structures that put financial stability at risk to hold large amounts of capital as an insurance policy to protect the taxpayer.



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There are 14 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 20th July 2009 at 1:07 pm

    Tories plan to scrap FSA – new body would regulate advisers
    The fear is, of course, who will staff this new CPA? If it comes down to nothing more than a select migration of FSA staff from one body to another, then will we be any better off? Whilst, like the vast majority of other IFA’s, I welcome the prospect of the FSA being scrapped, what replaces it, as far as the punch-drunk IFA sector is concerned, might be even worse. And what will “the rules” comprise? I suppose a set of properly articulated rules would at least be a step forward from what we have now, but the “much tougher approach to consumer protection” sounds like it might be very nasty. Isn’t the FSA’s approach to consumer protection, in terms of what it routinely inflicts on IFA’s, pretty tough (vicious) already? Maybe a better set of objectives for the CPA would be more preventative regulation in place of regulation by hindsight under the feeble pretence that the FSA is doing a good job. And a regulatory structure that is proportionate to the degree of risk posed by each particular sector. On that basis, the IFA sector might finally get what it has manifestly earned. There is a great deal more we need to know how any new regime might work.

  2. Here we go again….!!!

  3. Tories to scrap FSA
    Any party that will scrao the FSA gets my vote! Some may think better the devil you know but the FSA has had its chance and done everything it can to shiy down the small IFA’s. Time is ripe for a change.

    What the hell? Do they not realise how much it will cost, not just in taxpayers money, but also in new training and examination fees for those who took the exams and qualified. What will happen to all current FSA qualifications? More exams, expenses and wasted time – until they change their minds again!! The Bank of England should be given full responsibility for financial stability of the Country, but the FSA should possibly be restructed to properly regulate solely advisers. I thought the Conservatives were about “saving” public money – this will only increase it, or deviate essential funds to pamper to this follish “vote ploy” whim. There should be some organisations that the current Government in office could restructure, but NOT scrap in its entirety.

  5. Start the Party
    As ever Julian Stevens is spot on. Remember the PIA ‘experts’ going over to the FSA. Here is a suggestion, why not call any new outfit FIMBRA and for mortgages the MCCB, it could catch on. What with Australia being beaten in the Test match and FSA on the back foot, lets start the party. Stuff any cost, charge it to MP’s expenses when they are back from their exceedingly long holidays.

  6. what’s in a name?
    Sounds pretty much like the CPA will just be the FSA under a new name. Imagine that huge body only having responsibility for advisers. They would drive us even more crazy than they do now. The conservatives will not be getting my vote until we have some guarantees that advisers will be able to spend time writing business instead of spending hours & hours on useless paperwork which benefits nobody. As long as the system is weighted heavily in favour of the consumer , advisers will continue to suffer. It appears that the tories have been consulting with the FSCP when they should have been asking advisers about the form filling nightmare thatcalls itself regulation.

  7. Tories and FSA
    Transparency! Is this idea coming from the same MP’s who blacked out 90% of their expenses?

  8. Tories plan to scrap FSA
    And so say all of us, hooray at last someone has the bottle to tackle the FSA head on and hopefully get rid of a complete bunch of total bankers (Try substituting the b for a w). All I hope the Tories do is keep faithfull to not just the consumers but the bread and butter of the industry the IFA’s. The majority of us work bloody hard for sometimes small rewards but we do it because we want to keep faith with our clients in doing what’s right for them and not some inflated pratt at Canary Wharf earning an unjustified inflated income at our expense

  9. FSA to be scrapped because it failed to do what it was charged to do!
    And that was to protect the consumer. Protecting the consumer is what all good IFA’s do and so we should support any specifically tasked agency to regulate us. The puerile debate re Fees or Commission is a sop that the FSA bought hook line and sinker when the Banks whispered in their ear that IFA’s should only be fee based thus leaving 90% of consumers having to go for second best tied advice via the banks once IFA’s had been marginalised under the RDR proposals. The Parliamentary Ombudsman accused the FSA of a decade of regulatory failure over Equitable Life, and we all know that was just one area of failure! The FSA has failed in its main task. The RDR was Bank driven and now that their world has collapsed around them, the RDR is as relevant as Gordon Browns choosing new wallpaper for No 10. If we have a new entity that is focussed on business and financial wellbeing of the entire populace rather than a left wing inspired belligerence against profit and growth then we just might get out of the mess this government and the FSA in particular allowed happen by listening to those who have greed on their agenda not protecting consumers. My only fear is that there seems little difference between any of the parties with regard to greed. But surely we must welcome the chance to rid the UK of this unelected Judge Jury and Executioner that denies us IFA the Human Rights that every other EU citizen has but we do not.

  10. Scrapping the FSA
    Wonderful news albeit some 10 years too late. taking the responsibility for the banks away from the Bank of England was the start of all the problems. Coupled with a toothless regulator who allowed the banks to ride roughshod over the Financial Services industry.

    The distribution of fines to smaller business and little or no regulation of the banks.

    Lets get back to some proper credit control and not push financial schemes which put large pay packets and bonus’es into individuals who have no idea whatsoever about REAL financial control.

    However a word of caution, the best man for the job is no tGeorge Osborne but Vince Cable . he is the only person in the House of Commons who was aware of the situation more than 2 years ago.

  11. Scrap the FSa
    Mr Cameron , you are a bloody laugh. Gordon Brown has come accross as honest and credible, may be not the most energetic, Cameron is just a fool.

  12. Waste of time and money
    This is just headline grabbing, on the part of the Tories. What would be the point of scrapping one regulatory body to replace it with another, which in all likelihood as other posters have noted, will be staffed by FSA bods anyway. Just wastes time money and resource. IFAs are the most heavily regulated by the FSA, and yet we are not at fault here, in fact most of us have fought to protect our clients. The change needs to come in how banks are regulated when trading between themselves. Here’s a radical idea, why not ban banks from providing advisory services all together, and force them to concentrate on minding their balance sheets? Instead of this RDR nonsense about advisor charges and direct sales, we could scrap tied advice altogether and only authorise independent advisors!

  13. Vince Cable
    Have to say I agree 100% with Jack Ewins. I doubt it would happen but when the Conservatives get in and they will (Gordon Brown “Honest” !!! – don’t make me laugh – the first thing he did was tax funded pensions which of course affected his and the civil service/FSA pensions not one jot!) – then in the spirit of cross party consensus I would suggest that Vince Cable should be given a very senior job re financial regulation indeed. He is the only one who clearly has a grip on the real issues.

    Beware of consensus politics, a phrase used to describe the practice of government , Conservative and Labour Party, who are were in agreement, or consensus, over basic government policies which were executed by the same executive i.e. the FSA. New Labour was elected because it was closer to Conservative Party than it was Old Labour. My concern is that Cameron is Tony Blair, mark two and he will merely adopt the FSA under a new name. What we now want is some clear water between RDR and the Conservatives. They could start by deferring its start date from 2012 until a proper analysis has been completed. SIMON MANSELL TEMPLE BAR IFA LTD

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