The Personal Investment Authority (PIA) which is itself under sentence explains -
In May 1997 the Government announced major reforms to the regulation of financial services. The Chancellor said he would bring together nine different financial Regulators into a single body.
The "FSA" (for Financial Services Authority), as the new Regulator has been dubbed, will regulate all banks, building societies, life assurance and general insurance companies, stockbrokers, investment managers, financial advisers and more besides.
The old arrangements have been criticised for potential gaps in the system, the confusion to consumers from a large number of regulators and, of course, high profile scandals like pensions mis-selling. Headed by Howard Davies, the ex-Deputy Governor of the Bank of England and formerly at the CBI, this new "super regulator" is undoubtedly an opportunity to ensure more effective consumer protection right across the whole of financial services. At the same time it risks being a remote, big city institution.
FSA will be officially launched on 28 October. But the nuts and bolts of this massive overhaul are still very much under consideration. The legislation will come in two parts: first there will be changes to the Banking Act to transfer responsibility for banking supervision from the Bank of England to FSA. This will happen in the early part of 1998. This will be followed by a major bill to sweep up the existing legislation — such as the 1986 Financial Services Act — into a new and comprehensive Act.
The report produced for the Chancellor on setting up FSA was encouraging in several ways. It puts consumer protection at the top of its priorities and contains commitments to:
Free copies of this report [A Report to the Chancellor on the Reform of the Financial Regulatory System - Securities and Investments Board (SIB) July 1997] can be obtained by phoning the SIB contact number below.
Despite these welcome signs, many points are still unclear. For example, it is not yet certain if mortgage lending or long term care insurance is to be properly regulated for the first time. What is certain is that the many loud voices of trade associations, big high street names and city firms will be heard, fighting their corner as details of the new arrangements are discussed. It is important the consumer voice is also heard.
The first official opportunity for consumer organisations to make their voice heard will be consultation which begins with the official launch at the end of October 1997. Consultation will include important issues such as complaints, compensation, and consumer representation.
To ensure the widest possible consultation, the PIA’s independent Consumer Panel has produced a very short briefing leaflet and questionnaire, enclosed with this issue of NfCG NEWS. Further copies may be obtained from Chris Terry at PIA, whose phone number is below.
At the suggestion of NfCG’s Gerry Lanchin, the PIA and the National Consumer Council held a seminar about "Regulatory Reform". It was attended by individuals from consumer and voluntary organisations and NfCG was well represented. A brief report is given elsewhere in this issue.
PIA contact - Chris Terry
Tel: 0171 4185274
Securities and Investments Board Publications Unit:
Tel: 0171 382 0851
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