The Financial Services Authority (FSA), the Financial Ombudsman Service (FOS and the Office of Fair Trading (OFT) are, it seems, getting together to form a new committee to protect the consumer.
This new committee will be tasked with identifying “any risks with the potential to turn into widespread problems, and determine fast and effective ways of dealing with them, whether through regulatory action or consumer complaints”.
The idea is to nip future problems with the financial system in the bud before they have serious effects, the usual point at which the regulators start to look at problems. The committee will use experts from all three regulators, which should allow a fast and decisive response to any threat.
The Tories had threatened to shut the FSA down and hand over all its powers to a reinvigorated Bank of England (BoE). This though may not be on their immediate list of priorities if they take office. The country’s economic position and an emergency budget will keep their attention for some time. This new proposal by the regulators, if followed through, may well entrench the FSA’s position making it harder for the Tories to undo the knot.
There is also of course the ongoing FSA sponsored Retail Distribution Review (RDR), which is due to have lasting effect on the whole regulatory framework and how financial services are delivered to the public. Once fully underway that will also be hard to unwind.
The OFT is the consumer and competition authority for the UK. It also regulates the consumer credit and debt collection industries. FOS settles disputes between businesses and consumers. The FSA regulates the financial services industry to maintain market confidence, promote public financial understanding, protect consumers and prevent financial crime.
As you can see there is the potential for much overlap
What we may eventually end up with is some sort of ‘super-regulator, because once in place each individual body may find it hard to act without first consulting the committee.
One also wonders if there is not a seat for Trading Standards (TS) on this new committee. Surely they are in a position to add value? After all it exists to encourage honest enterprise and business and help safeguard the economic, environmental, health and social well-being of consumers.
Such a potentially powerful committee would also have to have quite a lot of political clout or connection to work effectively. New laws may also need to be enacted to support its findings. Otherwise it will be left to making pronouncements which are never acted on. It would need to be used proactively or end up being an ‘I told you so’ group.