2011-04-14
By Editor
The ABI has called for better co-ordination between the new financial regulatory authorities, with the emphasis on transparency and accountability and a focus on positive consumer outcomes.
Responding to the Treasury’s consultation: A New Approach to Financial Regulation, Otto Thoresen, the ABI’s director-general, said, “It is vital that the new Prudential Regulation Authority and Financial Conduct Authority do not duplicate each others’ activities. Without clear co-ordination and sharing of information, firms could suffer the unnecessary cost of having two overlapping regulators.
To achieve the best outcomes for firms and consumers, the ABI says both the FCA and PRA must work in a "co-ordinated, joined up and transparent manner".
The ABI is particularlu concerned about the cost of dual regulation. It is not yet clear how costs will be apportioned and what safeguards will be in place to ensure that dual regulated firms are not levied twice for the same activity. Dual regulated firms will also incur additional costs to ensure ongoing compliance with the requirements of two regulators, for example supervisory visits, requests for information, rulebooks and documentation.
The ABI welcomes proposals to limit the framework legislation by introducing a statutory duty of co-ordination, a requirement for there to be Memorandum of Understanding between PRA and FCA and cross-membership of the boards of the two authorities. This will encourage a framework to enable co-operation without imposing bureaucratic restraints on how this is done.
In line with the FCA’s statutory objectives to promote consumer choice and competition, the ABI believes the FCA should encourage and promote access to financial services to help make it easier for consumers to access services and products that meet their financial needs.
The role of the Financial Ombudsman Service (FOS) is to resolve individual disputes between consumers and financial services firms. When the FOS deals with cases that have wider implications, raising regulatory or legal issues which may affect how businesses operate, the ABI considers it essential that these cases are dealt with by the FCA or a court. The FCA should also oversee and conduct regular reviews of the FOS to ensure it is accountable and operates effectively and consistently.
Further, regulation of complaints management companies should be enhanced, they suggest by bringing them within the FCA’s regulatory remit. “As they are now involved in a growing number of FOS complaints they need to be suitably regulated and supervised to ensure they are acting in the best interests of consumers,” the association advised.
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