FCA ready to bury light touch supervision
LONDON (Reuters) - Britain's new financial watchdog is set to unveil its plans for tougher rule enforcement on Thursday, which the government hopes will help prevent a repeat of the financial crisis.
The Financial Conduct Authority (FCA) will be launched on April 1, April Fool's Day, and the new watchdog will need to show that the "light touch" supervision of the past is a joke now truly buried.
The FCA will be responsible for enforcing rules and punishing breaches while a new unit at the Bank of England will make sure banks hold enough capital.
The 11-year old Financial Services Authority which was criticised for failing to spot the 2007-09 crisis brewing will be scrapped.
"I suspect the FCA will want to shift up another gear from where they are at the moment and we will see fines go up," said Calum Burnett, financial services lawyer at Allen & Overy.
Firms are bracing themselves for products to be temporarily banned while the FCA investigates whether consumers are being ripped off.
"The whole development of a new product will become cumbersome," said Etay Katz, a lawyer at Allen & Overy.
The FCA will try to end years of mis-selling, culminating with the 12 billion pounds banks have already paid in compensation for loan insurance sales (PPI).
Consumer groups are reserving judgment on the new watchdog as new mis-selling concerns unfold over interest rate swaps.
"We'll be watching closely to make sure the FCA is a true watchdog, keeps to its word and puts consumers at the heart of everything it does," said Richard Lloyd, executive director of UK consumer lobby Which?
The new watchdog will give earlier warnings to customers and will be able to select an expert to review a firm's operations - with the firm footing the bill.
Banks are already complaining that the longstanding "caveat emptor" assumption, meaning the buyer has some responsibility, was being thrown out of the window.
Lawyers say parts of the market which regulators had left alone, like wealth management and wholesale market conduct, are coming under closer scrutiny with enforcement cases likely.
The FCA aims to be more sceptical and will "follow the money", checking for huge margins on products that may flag abusive, hard sell tactics.
(Reporting by Huw Jones; Editing by Elaine Hardcastle)
- Tweet this
- Share this
- Digg this
- Ten countries scour sea for Malaysia jet lost in 'unprecedented mystery' |
- Exclusive: Malaysia plane probe narrows on mid-air disintegration - source
- Shots fired in air during raid at Crimea naval base |
- Missing Malaysian jet may have disintegrated in mid-air - source |
- CORRECTED-UPDATE 4-Malaysia Airlines plane crashes in South China Sea with 239 people aboard - report