So what had been dubbed the Consumer Market Protection Authority has now changed to the Financial Conduct Authority (FCA). Just like that. Imagine being in the room where they bashed out that decision. What was the reasoning behind the name change? Admittedly it is less of a mouthful but it also sounds a bit prim and proper- as if the new team will sit around a large mahogany table, drinking Earl Grey and debating fiscal etiquette.
I don't know if anyone else has noticed but the new title also has a spooky similarity to its predecessor. Yes, I am observant. Unfortunately the likeness may extend further if the Treasury's consultation paper, published yesterday, is anything to go by.
After the treat of ploughing through the chapter dedicated to the FCA it would seem there is a risk that, if left to its own devices, the new regulator could end up making similar mistakes as the one we are in the process of shooing out the door.
Yes it will be responsible for brokers' prudential regulation as they fall out of the Prudential Regulation Authority's remit and this means it can demand that firms need to demonstrate financial soundness by having enough money stashed away, a minimum capital requirement if you will, to be able to wind down if need be. But how much is enough and how will this be policed?
The answer is mainly the same way it is now - through baseline monitoring. However firms that are deemed "prudentially significant" could end up with a lot more proactive and intrusive attention. With these vague subjective terms being bandied about, you could be forgiven for thinking the Government is basically covering its back so that it can make it up as it goes along.
Another example of this is where it claims that "although issues based supervision will be the key pillar of the FCA's approach, supervisory contact on an individual firm basis will continue".
This is a bit like saying - yes we have this new mentality which is obviously extremely important when it suits but when we need to we'll shelve the lofty aspirations and crowd pleasing quips and just get on with doing things as we always have done.
Not that it is all bad - there is now greater clarity on how the FCA will actually be a champion for the consumer in that the Government has sort of admitted that doing that too wholeheartedly is a little at odds with the role of a financial regulator. Therefore its championess has been diluted slightly.
The paper also draws a line under the uncertainties that have allowed the Financial Services Authority to stall with its review of the Financial Services Compensation Scheme. So with a bit of luck the ball should start rolling here and brokers will start getting some answers they so clearly deserve.
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