Today the ABI calls 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 H M 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 both the FCA and PRA must work in a co-ordinated, joined-up and transparent manner. If there is clarity about who is responsible for what, and everyone is aware of the rules and decision making processes across the board, then understanding should increase and consumer detriment decrease.”
The key points in the ABI’s response include:
- There is particular concern about the cost of dual regulation for members. 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, documentation etc.
– As the Government recognises, close co-ordination between the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) will be necessary to ensure that the new regulatory structure operates in an efficient and effective manner.
– We welcome the Government’s proposal 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 provide a framework to enable co-operation without imposing bureaucratic restraints on how this is done.
– Consumers, financial companies and the regulatory system itself will benefit if the regulators’ operational approach is made transparent. Better understanding of the rules and regulations will mean that the authorities will have to be more accountable for their actions and decision making. This should create a more efficient and trusted regulatory system.
– In line with the FCA’s statutory objectives to promote consumer choice and competition, 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, it is essential that these cases are dealt with by the FCA or a court.
– The FCA should oversee and conduct regular reviews of the FOS to ensure it is accountable and operates effectively and consistently. The role of the FOS within the new regulatory regime should be clearly defined in statute, including its relationship with the FCA.
– Regulation of complaints management companies should be enhanced, perhaps 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.
Source : ABI Press Rlease
