/ Money

New financial watchdog must succeed where the old one failed

Magnifying glass looking at stack of money

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?

Comments
Profile photo of JosephineBacon
Member

Why on earth would the “new” watchdog, which is the old one with a new name, be any more of a watchdog than the previous one when the Tory and LibDem leaders are in the pockets of the banks? What about Dave Hartnett’s sweetheart deal with Goldman Sachs when the rest of us are struggling to pay our tax bills? How anyone could actually BELIEVE that the banks will be punished in any way beggars belief. How naive can you get?

Profile photo of Chris McBride
Member

Hi Josephine,
The reason we are campaigning on this issue is to try and get a regulator that will stand up to the banks when it counts. We want an open, strong and proactive watchdog that consumers can count on and are putting pressure on the Government to make this happen. I can understand your frustration but this is precisely why we are campaigning on this issue; to make sure that the new body is not the same as the old one but with a new name.

Member
JANE DAVIES says:
14 March 2012

Banks need to have the financial well-being of consumers at their core. They have caused far too much debt and detriment in their efforts to profit from individuals. The tax payer bails them out, they must look after their taxpayer customers. Hopefully the FOS will begin to have more OMBUDSMEN with consumer champion backgrounds rather than the ex-financial industry staff it is currently predominated by after all it is supposed to be independent. Most consumers do not believe it is, that is certainly not the experience people complaining have. Read every last word in terms & conditions, not because you “love a good read” but because you cannot trust the banks in any way not to try and trick you into a poor deal. Choose building societies, mutuals, co-ops and credit unions for a more honest way of banking with benefits coming back to customers rather than up to the bosses at the top.