The Financial Services and Markets Act has been a “complete failure”, according to Mark Garnier, Treasury select committee member.
Speaking at a Lansons fringe event at the Conservative conference in Birmingham this week, Garnier, Wyre Forest MP, said the Financial Services Authority (FSA) has failed to create constructive relationships with firms.
He said: “There is no doubt the FSMA has been a complete failure from start to finish and I am not saying that just because it was set up by Gordon Brown. Under the previous regime, firms had a relationship with the regulator. Under the FSMA it is like a sketch from Little Britain, you call the regulator and they tell you the computer says no. There is no relationship there so no wonder it has not worked. It needs to be changed.” (article continues below)
But Garnier, a former investment banker, said he is concerned that the new proposed regulatory structure gives too much power to the governor of the Bank of England.
“There is no doubt the FSMA has been a complete failure from start to finish”
The Treasury is consulting on proposals to replace the FSA with the Prudential Regulation Authority (PRA), to be positioned under the Bank of England, and pass conduct of business oversight to the Consumer Protection and Markets Authority.
The PRA will conduct prudential supervision of all deposit-taking firms, insurers and investment banks. The CPMA and the PRA will both be overseen by the Financial Policy Committee which will be chaired by the governor of the Bank of England.
Garnier said: “One problem with the proposals is it makes the governor of the Bank of England very powerful. The current governor is very good but there is no guarantee that governors are going to be as good in the future.”