Labour has called on the FSA and future financial regulators to be made more accountable to parliament.
In an interview in this week’s Money Marketing, Fund Strategy’s sister publication, Chris Leslie, the Shadow Treasury financial secretary, says concern over the retail distribution review (RDR) is an example of the “democratic deficit” between legislators and regulators.
This marks a significant policy shift for Labour which created the FSA in 2001 as an independent regulator.
Leslie says: “There has to be a solution for the RDR and if parliament had power or control over it, we would probably go through the legislative process and find it.”
From 2010/2011 the FSA will be audited by the National Audit Office (NAO), which will allow the public accounts committee to receive and investigate reports into aspects of the economy, efficiency and effectiveness of the FSA’s performance. The NAO will also audit the CPMA and Prudential Regulation Authority. (article continues below)
Leslie says he will await further details of the new regulatory structure before proposing changes aimed at increasing Parliamentary accountability.
Richard Hobbs, a director at Lansons, says: “A major consideration is the quality of the examination the FSA has faced in the past. While Labour was in power, the FSA, Gordon Brown’s creation, escaped rigorous examination but the new Treasury select committee should ensure more appropriate scrutiny takes place.”
Iain Anderson, a director at Cicero Consulting, says: “Labour is carefully crafting its new positioning. There is also a question of ensuring the Treasury can provide the right oversight of the new regime and I expect Labour to ask it.”