MPs and Lords have called on the Government to change the Financial Conduct Authority’s (FCA’s) strategic objective from focusing on confidence in the financial system to fairness and transparency.
A joint committee made up of members of the House of Lords and the House of Commons has today published its report on the draft financial services bill. The bill sets out the legislation for the new regulatory framework under the FCA and the Prudential Regulation Authority.
Currently the draft bill sets out the FCA’s strategic objective as to “protect and enhance confidence in the UK financial system”.
The draft also sets out three operational objectives of the FCA to secure an appropriate degree of protection for consumers, protect and enhance the integrity of the UK financial system, and promote efficiency and choice in the market for certain types of services.
However the current wording of the FCA’s objective has been criticised, as it could lead to the FCA looking to boost confidence in the system by hiding or downplaying cases of consumer detriment.
The Financial Services Authority, the Independent Commission on Banking, and the Office of Fair Trading have all criticised the current wording saying it is unclear and does not accurately reflect the FCA’s responsibilities.
The report says: “The FCA’s strategic objective should be amended to focus on promoting fair, efficient and transparent financial services markets that work well for users. This would better reflect the Treasury’s intended purpose for the FCA, which is to ensure that business across financial services and markets is conducted in a way that advances the interests of all users and participants.”
The joint committee has also recommended for the FCA to have a clearer role in promoting competition, including the ability to make market investigation references to the Competition Commission and the power to hear super-complaints.