Advisers have escaped from being caught by an overhaul of the approved persons regime after the Treasury backed away from introducing a new approvals system for the whole financial services industry.
In its final report in July, the parliamentary commission on banking standards recommended a new FCA senior persons and licensing regime for banks and to consider extending this to the wider financial industry.
The Treasury then said it would be easier to scrap the approved persons regime for the wider industry, but has now backed off over concerns scrapping the current approvals regime could delay the introduction of a new approvals systems for banks.
In its response to the PCBS, published this week, the FCA said it would take a different approach with the new regime applying only to deposit-taking institutions such as banks, building societies and credit unions.
Senior persons will require pre-approval by the regulator and senior bankers could face criminal sanctions if they recklessly mismanage a bank.
The FCA has also launched a blitz of consultations and reviews including whether to introduce bigger fines, pay whistleblowers and broaden access to the Financial Ombudsman Service.
Independent financial consultant Richard Hobbs says: “The PCBS recommendations were always half-baked by not looking at the rest of approved persons. It was intellectually weak and left the FCA in an impossible position. Either it would need to point out the flaw in the commission’s position, which they politically didn’t want to do, or try to implement something which is messy. It has chosen the politically savvy option.”
Apfa director-general Chris Hannant says: “The Government has identified a problem in banking and that is where the solution should apply. The FCA is being logical and sensible because if you have a fire you don’t start hosing down the neighbours as well.”