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TSC chairman Tyrie warns FCA will stifle competition

Treasury select committee chairman Andrew Tyrie has warned that the new Financial Conduct Authority will stifle competition and increase firms’ regulatory costs.

The Government plans to split the FSA into the Prudential Regulation Authority and the Financial Conduct Authority in 2013.

Last month, the FSA warned the financial services industry will have to bear the brunt of higher regulatory costs as the FCA pursues a more interventionist style.

FSA chief executive Hector Sants said the FCA’s supervisory work will cost £200m a year more than the FSA’s 2010/11 budget of £454.7m.

Speaking to the Financial Times, Tyrie (pictured) says: “I am concerned that we are going down a route which in the long run will stifle competition and add to costs.

“We should use the opportunity created with fresh legislation to examine how we can get the best value for money for regulation and make sure there are pressures to cut away otiose regulation rather than a one-way ratchet.”

The TSC’s report into competition and choice in the banking sector, published in April, called on the FCA to treat competition as a primary consideration.

The Government’s draft legislation, published this month, gives the FCA a duty to promote competition so far as it is compatible with its main objectives, which include facilitating efficiency and choice in the market.

The TSC said it will continue to push for the FCA to have a primary duty to promote effective competition.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 12th July 2011 at 9:26 am

    Noble aspirations but without practical measures forcing the FSA/FCA to trim its budget drastically ~ and there are many ways in which it could do so ~ nothing will change.

    The FSA is an unaccountable leviathan and the government has already announced that the FCA will be accountable only to its own board, which means effectively that it’ll be no more accountable to anyone than is the FSA.

    The TSC is just a bunch of men in suits with the power to ask questions but nothing else. Thus, the likes of Sheila Nicoll can sit there beside Hector Sants smirking smugly in the knowledge that they’re untouchable and that their appearances before the Committee are just token charades of accountability. It’s just a waste of time and money that accomplishes nothing of any value whatsoever.

    What the TSC should be calling for is the creation of an Independent Regulatory Oversight Committee with the power to instruct the FSA/FCA “This is wrong and you’re not going to do it.” Until we have a body of that nature and with that degree of authority, nothing will change. The FCA will remain free to steamroller through its own agenda in just the same way as the FSA before it ~ with accountability to no one but its own board.

  2. Andrew Tyree is spot on,. for goodness sake, there will be little competition left if RDR puts thousands of IFA’s out of Business. Just banks and fee charging HNW client wealth mannagers. When will this stupididty stop??

  3. £200M MORE a year!
    That is some bonus they are about to award themselves.
    The rule of economics tells us that they cannot keep raising their own costs whilst expecting us to reduce our charges.
    Even if, after RDR costs to consumers were to fall as the fsa seem to hope they will,, this would be wiped out by the ever increasing appetite of the leviathan.
    Revolutions have taken place due to similar governance.
    Whilst Canary Towers will be dining on champagne & canapes the rest of us will be running around in circles trying to pay for their extravagance.
    Small FS businesses will not survive the escalating costs.

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