Responding to a consultation paper from the FSA entitled “The Journey to the Financial Conduct Authority”, Chris Hannant, policy director at AIFA said regulatory authorities have previously had too little public accountability for their actions.
“The role of the regulator should be to foster a successful financial services sector an encourage consumers to take positive decisions about their finances. We need clear and measureable objective such as the levels of savings and protection consumers have,” Hannant said.
The FSA is set to formally move over to its “twin-peak” structure next year, which will see activities split across the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA).
Martin Wheatley, currently managing director of the FSA will take on the role of chief executive officer of the FCA in 2013.
Start afresh
At the launch of the consultation paper in London this morning, he said: “The FCA offers a huge opportunity for the regulator and firms to start afresh, and work in partnership to reset how we deal with conduct in financial services.
“We see it as the role of the regulator to not only make the relevant markets work well but also to help firms get back to putting their customers at the heart of how they do business.”
Wheatley has made no secret of his intention to take a heavy-handed approach towards those firms he does not believe to be putting client outcomes at the centre of their systems and processes.
Last week he spoke at the Association of Private Client Investment Managers and Stockbrokers’ (Apcims) annual conference and called for a culture change in the wealth management sector.
Decisive action
Today he said the FCA will aim to learn the lessons from previous issues such as PPI mis-selling by taking “earlier and more decisive action” and will devote more resources to analysing possible risks and looking at cross-industry issues to assess the cause of problems.
This approach is to be backed by new powers that will allow the FCA to ban products and promotions if it believes they create risks to consumers – something that has already been pre-empted with the proposed ban of selling Ucis products to retail investors.
But AIFA argued that a key measure of the success of the regulator’s more interventionist approach would be a reduction in compensation claims and overall levels of compensation, and said the regulator should be accountable for delivering on this objective.
Meanwhile Mike O’Connor, chief executive of Consumer Focus, said: ‘”The test of the FCA will be whether it prevents toxic products such as PPI, mortgage endowments or split capital trusts in the future. Will it intervene early or will pressure from industry delay action?
"A model where customers are ripped off, and then awarded compensation years afterwards, is expensive and wasteful and serves consumers badly,” he concluded.
