Restoring consumer trust in financial services
Next year should see the replacement of the Financial Services Authority (FSA) with a new regulatory body called the Financial Conduct Authority (FCA).
Informed Choice chartered financial planner Nick Bamford spent a good part of yesterday at the FCA Conference in London.
He was there as one of a small number of IFAs to hear directly from the FCA about their plans to restore consumer trust in financial services and contribute to the debate about the type of regulator needed.
Welcoming delegates to the conference, Hector Sants, the Chief Executive of the FSA, shared some personal remarks on the challenges faced by the FCA.
He repeated part of a speech originally given by the first chairman of the FSA, Howard Davies, back in 2003, explaining that the words are as true now as they were then.
”The biggest disappointment of my time at the FSA has been the failure of firms, in particular their senior management, to learn the lessons of past mis-selling. Sadly the recent history of the British retail financial services industry is proof of the adage that those who fail to understand the mistakes of the past are condemned to repeat them.”
Certainly changing the attitudes of senior management at the largest financial services firms will be a significant challenge for the new regulator. The FSA appears to have failed to achieve this and there is no guarantee that the FCA will fare any better, even with the larger budget it appears to want.
When launched, the FCA is going to operate based on six regulatory principles. These include the general principle that consumers should take responsibility for their decisions.
With the role of the FCA having shifted since its original conception when it was named the Consumer Protection and Markets Authority, to a regulator with a focus on market conduct which should lead to consumer protection, we do wonder how the FCA might succeed in its goal of restoring consumer trust in financial services.
We look forward to continuing to engage with the FCA during this consultation process and hopefully contributing our views to their eventual shape when they launch next year.
Photo credit: Flickr/vagawi