THE FINANCIAL CONDUCT AUTHORITY (FCA): WHAT IT IS AND WHAT IT WILL DO
The Financial Conduct Authority (FCA) is one of the successor agencies to the Financial Services Authority (FSA) and is currently expected to be established by end-2012.
The FCA’s focus will be to regulate both wholesale and retail financial firms providing services to consumers and to maintain the integrity of the U.K.’s financial markets.
The authority will have the power to ban unacceptable financial products and enforce the withdrawal of misleading promotions, among other regulatory powers.
Much like FSA, the FCA promises to protect consumers by promoting transparency and healthy competition in the financial sector while helping consumers make the right choices; but will it be able to succeed where the FSA arguably failed?
The official “Approach to Regulation” document on the Financial Conduct Authority’s objectives and powers (.pdf, 508 kb) sets out how the authority will approach the delivery of its objectives. However, MPs and experts alike are worried that the FCA will be “more of the same”.
Back in August of 2016, a parliamentary committee announced an inquiry into the accountability of the FCA to be published by the Autumn of 2011 and earlier this week (albeit admittedly a bit late) the Treasury Select Committee published a full-blown report into Financial Conduct Authority. This in-depth report contains a number of recommendations for the Government’s consideration ahead of the drafting and publication of the Financial Services Bill.
Among the Treasury Committee’s most significant recommendations are that the FCA is properly accountable to Parliament and that tools are available to enable the required level of explanation from the regulator.
Commenting on the publication of the report, the Chair of the Treasury Committee, Andrew Tyrie MP, said:
“We need a fresh approach to regulation.
The plain fact is that the FSA did not succeed in protecting consumers from spectacular regulatory failures. The mis-selling of PPI and endowment mortgages are just two examples. The FSA is not only expensive, for which the consumer always pays, but many have told us that it has also become bureaucratic and dominated by a box-ticking culture.
The creation of the FCA is an opportunity to create something much better.
If we are not careful, the FCA will become the poor relation among the new institutions. But it is the one that will matter most to millions of consumers.”
Even though there are legitimate concerns, especially given the FSA’s recent mistakes, some experts hope that with careful planning and the Treasury Select Committee’s input the FCA will hopefully turn out to be less expensive and more efficient than the FSA in safeguarding the consumers’ interests.
