The Adam Smith Institute has suggested that the government scrap their plans to pass regulation from the Financial Services Authority (FSA) to the Financial Conduct Authority (FCA).
Instead, they suggest handing powers across to the Financial Ombudsman Service (FOS).
They suggest that the FCA shows no sign of understanding markets and ‘plans to busy itself interfering in City businesses’, according to a report in the Telegraph.
Rather than risk overlap of regulation and a huge cost to consumers of retail financial services, the think tank believes the FOS could take responsibility for enforcing consumer protection rules and the FCA should be terminated before it is established.
Along with the FOS, a self-regulatory professional body could deliver more effective regulation, at a much lower cost.
This is our preferred option. We see no reason why the existing professional bodies could not form a self-regulatory body to manage the behaviour and professional standards of all advisers, effectively and at a much lower cost to consumers.
This is particularly relevant following the introduction of the Retail Distribution Review (RDR), when all financial advisers will be qualified to a much higher minimum standard and will need to obtain an annually renewable Statement of Professional Standing, with their continuing professional development monitored by a professional body.
It’s a bold suggestion from the Adam Smith Institute; one that could result in big savings for the UK consumer.
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