At the Tenet annual conference in London yesterday, a delegate asked Hoban if a move to product regulation was needed due to recent regulatory failures.
The delegate said: “We’ve tried advice regulation for three decades now, it hasn’t worked lets move on. What we really need is regulation where the product itself gets regulated and rubber stamped.”
But Hoban said: “If you have products kite-marked it gives consumers more confidence. But equally what we don’t want to see is the process for innovation and competition in the financial services market unnecessarily harmed by product regulation because it could act as a brake on innovation. We need to think quite carefully about how it would work.”
The delegate suggested that if providers wanted to work outside a product regulation regime caveat emptor should apply.
But Hoban said: “I don’t think there is an appetite more broadly to move back to caveat emptor for non-standard products. There is not much support for that amongst regulatory and policy makers.”
Hoban also reiterated Tory plans to continue the implementation of the RDR if it wins next year’s election. He said: “When we announced our plans to scrap the FSA there were some questions of will this effect the timetable of the implementation of RDR. I don’t believe these reforms to the regulatory structure need to impact the time table of the RDR. To allow that process to be disrupted will be detrimental to the industry and consumers.”
Hoban also aired concerns over the recent failings in the structured product market. He said marketing material for the Lehman-backed products was “misleading” and failed to refer to the real risks involved for investors.