2nd April 2013
You may be confused with the fact you have three new regulators for financial services. You may even have heard that the Bank of England has taken the lion’s share of the power. That appears to be the Guardian’s take. It is also true the Prudential Regulatory Authority and the Financial Policy Committee are now very important parts of the Bank of England set up. The PRA will make sure banks don’t break themselves or the financial system, the FPC is tasked with spotting risks to the system coming down the track before they reach us and cause another financial crisis. These are powers not to be sniffed at.
But we wonder if the Financial Conduct Authority is the organisation that may have most of an impact on you. The FCA will set policy for how firms conduct themselves. It may also, to a slightly lesser extent, influence how the Financial Services Compensation Scheme and Financial Ombudsman Service operate. It can fine firms and individuals and put them out of business or prevent people working in financial services though its predecessor the FSA had that power too. But arguably it has one new superpower.
The FCA can ban products before they come to market, or make life so difficult that there is little point in bringing them to market and the new FCA boss Martin Wheatley is certainly making much of this new way of doing things as MoneySavingExpert reported in an interview.
“Under the new power we’ll have the ability to ban products. Obviously we have to have due cause, but we can do that before going through a lengthy consultation process. Instead we consult on the issue while the product isn’t on sale and if we’ve got it right, we’ll make those rules permanent at the end of a year. If we’ve got it wrong, then at the end of the year those rules will get annulled. But at least during that process the product won’t carry on being sold.”
Although, the banning power is described by some sources as a temporary one, it sounds as if it is permanent on Mindful Money’s reading.
If a product is toxic, the FCA will make rules preventing its sale permanent. It it isn’t toxic it will allow its sale. That doesn’t sound temporary. More like Martin Wheatley’s superpower.
Now all the FCA has to do is make sure it zaps the right products or, more accurately, the right wrong products.