Act must not end reform, advisers warn

The Financial Services bill received royal assent at the end of December, securing the dismantling of the FSA and creation of the Financial Conduct Authority and Prudential Regulation Authority.

However, consumer watchdog Which? said this should not mark the end of regulatory change.

It said in a statement: “Which? will continue to keep an eye on the new financial regulator to make sure it remains strong, open and proactive, and works in the interest of consumers.”

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Advisers have expressed concern that despite the changes, which include allowing the regulator to intervene on product pricing, the organisations will still be staffed by the same people.

Tim Purdon, managing director of Ayrshire-based Paladin Financial Services, said he was “guardedly optimistic”. He said: “The presentations by the FCA I have attended give me some confidence about regulation in the future. However it is notable that it will be the same people in an organisation with a new name.

“There needs to be a change in attitude and a recognition of the damage, distraction nand additional costs of excessive regulation.”

Another adviser, Sheetal Radia, adviser for Hertfordshire-based Financial Architecture, said regulation would be more effective if existing rules were enforced.

He said: “Effective regulation is vital if the market for financial services is to serve its purpose fully and if trust is to be restored and confidence rebuilt.

“If the new regulators learn from the mistakes of the previous regulatory regimes and demonstrate that they are able and willing to act, supervise and enforce the relevant rules and laws then the new framework will be more effective.”

Key points

■ The Financial Services Act heralds the creation of the Financial Policy Committee, The Prudential Regulation Authority and The Financial Conduct Authority.

■ The FPC will be a macro-prudential authority within the Bank of England, responsible for protecting and enhancing financial stability.

■ The PRA will be responsible for ensuring effective prudential regulation of firms which manage complex risks on their balance sheets. It will be established as a subsidiary of the BOE.

■ The FCA will be responsible for securing an appropriate degree of protection for consumers, protecting and enhancing the integrity of the UK financial system and promoting effective competition in the interests of consumers

■ All will start work on 1 April 2013.


■ The regulatory reform agenda was first proposed by chancellor George Osborne in his June 2010 Mansion House speech.

■ A consultation was launched in July 2010, followed by legislation in July 2011.

■ Pre-legislative scrutiny took place from July to December 2011.

■ The bill had its third reading in the House of Commons on 22 May 2012 and was sent to the House of Lords, with committee there starting on 26 June and finishing on 24 October. The bill left the House of Lords on 5 December 2012 and received royal assent on 19 December.

■ During the scrutiny process the government amended the Financial Services bill to include reference to criminalising Libor fixing.