Tory leadership candidate Liz Truss won the race to become the UK’s next prime minister, but whether or not she is up for the challenge is still up for debate.
During her campaign, Truss stirred much discussion around her proposed policies.
From looking at a UK energy price freeze to tackle spiralling bills, reversing the incoming hike in national insurance contributions to soften the cost of living crisis, to saying she will “sort out” the problems with doctors’ pensions in a bid to tackle the staff retention crisis – there have been a fair few promises made.
Others included changes to self-employment taxation and a substantial rise in the state pension.
But the one that put a bee in my bonnet was her plan to merge three of the financial regulators.
As part of her campaign, Truss was eyeing up the merging of three financial regulators – the Financial Conduct Authority, the Prudential Regulation Authority and the Payments Systems Regulator – creating a mega financial regulator.
Now it’s confirmed she is prime minister, whether she follows up on this – and many of her other promises – will be interesting to see.
When it first came to light, advisers said the plans to merge them are destined to fail.
Some argued that it had been considered in the past and perceived not to work, while others argued that the FCA is already too big and has too much to cover. I, for one, agree.
The financial services industry is a huge area to regulate and at a time where the FCA is trying to become proactive rather than reactive, this could be hugely counterproductive.
Expanding the remit of one regulator rather than separating out the roles and responsibilities into multiple just seems like a car crash waiting to happen.
It will just mean that the FCA, or whatever the merged regulator would be called, will be bigger but will have even more to cover.
It could see more of the bad actors slip through the nets, purely because of a lack of attention to detail from the relevant body.
Now don’t get me wrong, I do believe that there is certainly room for improvement within the regulatory space, but merging them is not the solution.
The best approach would actually be to instead break up the FCA to bodies that regulate the separate parts of the financial sector.
This would mean there could be a more specific focus on different parts of the industry.
There is also the argument that the pensions regulatory environment may benefit from simplification.
AJ Bell’s Rachel Vahey said there could be a case for merging the FCA with The Pension Regulator to create just one regulator responsible for all defined contribution pensions.
Now this is something that could work given there is already so much overlap.
This would help bring consistency for all pension consumers, meaning they get the same level of protection regardless of the background surrounding how the pension is established.
Currently the two regulators, the FCA and TPR, have differing rules.
Bringing these two together would mean it simplifies the implementation of rules for providers, who have found in the past that two sets of rules from two regulators are contradictory in practice.
But for now we just have to wait and watch if Truss lives up to her promises, giving the public a chance to realise if the right decision was made or if we have landed ourselves with yet another unTrussworthy politician.
sonia.rach@ft.com
