MPs and Lords released recommendations on what the new financial watchdog should be focusing on earlier this week, making for interesting reading. But will their suggestions be enough to ensure its success?
Monday 19th December 2011 was a busy day in the world of financial services. George Osborne delivered the government’s response to the Independent Commission on Banking and The Financial Services Authority (FSA) announced new rules on mortgage lending.
However, there was one other important story that didn’t get quite as much press coverage.
New watchdog, new objective
At the start of November I asked ‘What do you want from our new financial watchdog?’ Well, a committee of Lords and MPs have been examining the same issue since September. They released their report on Monday and their conclusions make for good reading.
Their major priority is on making sure the new watchdog – The Financial Conduct Authority (FCA) – is given a clear, consumer-focused objective. At the moment, the objective focuses on ‘confidence’ – a woolly notion at best. We expressed our concerns about this proposal and the committee agrees with us:
‘The FCA’s objective should be to focus on promoting fair, efficient and transparent financial services markets that work well for users.’
Will it get it right for consumers?
When I asked you what you wanted from the watchdog, pay and bonuses were major concerns. Maureen was concerned about ‘outrageous bonuses’, while Phil wanted to see an end to ‘bonus culture’. The report has gone some way to addressing these issues as it wants the new bodies to take ‘an active interest’ and ‘rigorously enforce the remuneration code’.
Another major plus point for consumers is the plan to make the regulator more transparent and open about its activities. The recent report into the near-collapse of RBS only came out after severe political pressure. Originally, the FSA issued a statement of just 298 words to explain the collapse. That should not be allowed to happen again.
The committee has recommended that the new body should release more information about its work, notify the public earlier when it is taking action against a firm and publish the minutes of its board meetings. This move towards greater transparency helps to build a system you and I will have more trust in.
The recommendations made by the committee will now be examined by the Treasury and a final version of the Bill will be published next year. The report is supportive of the key changes we wanted to see and we’ll continue to work hard to ensure that they end up in legislation.
What do you think of these proposals? Do they give you more confidence about the bodies keeping an eye on the banks?
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