20th June 2013
One of the less well noticed recommendations of the Parliamentary Commission on Banking Standards was for a slimmer Financial Conduct Authority.
This is the regulator that oversees your investments. It is one recommendation which Mindful Money may not agree with. But first here is the key quote reported by trade website Money Marketing.
“A strategic aim of the FCA should be to become a smaller, more focused organisation. The commission recommends the FCA replicate the Bank of England’s stated intention for the Prudential Regulatory Authority to operate at a lower cost than its equivalent part of the FSA, excluding what is required to fund new responsibilities. The FCA should set appropriate timescales for implementation of this recommendation.”
We can see the appeal. Focusing on the big issues could see the organisation cut out some of the noise and spot the really big RBS or HBoS sized problems coming over the horizon.
But actually that is – mostly – the job of the PRA not the FCA. We hope the Commission hasn’t forgotten that the FCA is also tasked with ensuring that financial advisers, investment platforms, insurers, fund firms and even bank staff adhere to decent standards of conduct in their treatment of you the customer, client, policyholder or investor.
Much has changed or is changing in terms of investment and pensions – commission payments to financial advisers have been banned and a lot of behaviour that led to bias or perceived bias in terms of recommendations outlawed.
This should mean you get better advice, better service and, longer term, better value for money but the reforms are only just bedding in and there is a lot more detailed change to come.
So we think the FCA does need to be focused. But whether it needs to be smaller is a different matter altogether. Of course, investors pay for regulation – because products and services cost more and no-one should be cavalier about this. Costs should not keep increasing unchallenged.
But the FCA and other smaller bodies which it overseas such as the financial ombudsman service and the compensation scheme, help ensure either that things don’t go wrong or when they do, you get compensated.
So focused – yes. Smaller – we are not so sure.