FSA Petition - Now closed but the response is interesting.

[CliveH]

Having worked in "Finance" for many years, I for one have been appalled at the FSA being asleep at the wheel on far too many occasions. Equitable Life, though to their dilatory regulation of the Banks. This debacle has cost us all a huge amount of money.

 

The FSA has overseen a dramatic decline in secure pensions and the savings culture within the UK. With that in mind a petition was set up:-

 

 

"Whilst recognising that there are many competent, hard-working and well meaning people working for the FSA, by failing to properly regulate banks and other major financial institutions the FSA’s management has seriously harmed the financial well being of the UK population and now by over-regulating small businesses it threatens to make financial advice unaffordable to those people at the time they need it most. People need encouragement to save, not barriers.

 

We believe its current policies will prove disastrous to both businesses and consumers alike and we have no confidence in the FSA to regulate either competently or fairly under its current management.

 

http://petitions.number10.gov.uk/FSANOCONFIDENCE/

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Government response

 

Government believes that the regulatory structure must be fundamentally reformed to help prevent the recent financial crisis reoccurring.

 

The current tripartite regulatory system failed in three main respects.

 

Firstly, no single institution had the responsibility, authority or tools to monitor the system as a whole, identify potentially destabilising trends, and respond to them with concerted action.

 

Secondly, the approach by the Financial Services Authority (FSA) to micro-prudential regulation was flawed. In the run up to the financial crisis, financial supervision relied too much on ‘tick-box’ compliance with detailed rules at the expense of proper in-depth and strategic risk analysis.

 

Thirdly, there was a fundamental lack of clarity and coordination between the roles of the Bank, the FSA and the Treasury, which meant that the authorities were unable to act decisively in the run-up to the financial crisis, and struggled to co-ordinate their actions when the crisis hit.

 

The Government will introduce tougher, smarter and more effective financial regulation to prevent this situation ever arising again. The tripartite structure will be abolished and the Financial Services Authority will cease to exist in its current form.

 

The Government has announced three key policy proposals for reforming the UK’s system of regulation:

 

1. An independent Financial Policy Committee (FPC) in the Bank of England, to analyse emerging risks to the financial stability of the UK’s economy and coordinate the appropriate response.

 

2. A new Prudential Regulatory Authority (PRA) as a subsidiary of the Bank of England, to ensure that systemic risks can be considered alongside firm-specific issues. The PRA will be solely responsible for day-to-day prudential supervision of financial institutions.

 

3. A strong independent Consumer Protection and Markets Authority, with a mandate for promoting confidence in financial services and markets, ensuring that markets are transparent in their operation and that all participants get the degree of information and protection that suits them.

 

Furthermore, the Government will establish an Independent Commission on Banking to review the UK’s banking industry. The Commission, chaired by Sir John Vickers, will look at the structure of banking in the UK, the state of competition in the industry and how customers and taxpayers can be sure of the best deal. The Commission will come to a view and the Government will decide on the right course of action. The terms of reference for the Commission are on the Treasury website at:

 

http://www.hm-treasury.gov.uk/d/banking_commission_terms_of_reference.pdf.

 

Before the Government sets up the new regulatory bodies in their permanent form, it will conduct a full and comprehensive consultation.

 

During the period of transition to the new regime, the Government will be guided by the following four principles: minimising uncertainty and transitional costs for firms; maintaining high-quality, focused regulation during the transition; balancing swift implementation with proper scrutiny and consultation; and providing as much clarity and certainty as possible for the FSA, Bank and other staff affected during the transition. In order to do that, the Government will ensure the passage of the necessary primary legislation within two years.

 

These changes will ensure that financial firms are responsibly managed and regulated. The greater stability and resilience of the financial services industry will not only benefit the sector itself, but also the wider economy. The reforms will also ensure that the conduct of firms, and with it the interests of consumers and participants in our financial markets, are placed at the heart of the regulatory system and given the priority they deserve.

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Nice words - let us hope the reality lives up to them.

 

[Brock]

Agree with you Clive about the FSA. I'm less convinced we need to do anything for banks other than to revert to the controls we had prior to the FSA coming into force. There is a need to regulate the selling of financial services although that need may be reducing as people realise they only need a few of those services now and not the plethora that existed.

 

There are some very decent people in the financial services who act with integrity. I hope they don't suffer any more red tape because of the cavaliers.