FSA wants to regulate public sector treasury advice

Icelandic bank collapse sees FSA move on treasury advisers

A Commons committee has called for the Financial Services Authority to be given new powers to regulate treasury advice to public sector bodies on how to manage cash reserves.

The demand is contained in a report on the management of local authority investments in the wake of the risk of losses as a result of the collapse of Icelandic banks.

Under current rules cash deposits and professional advice relating to such monies remain an "unregulated" activity outside the FSA's remit.

The all-party committee called for a change in legislation so the FSA can regulate the provision of advice by treasury management advisers to NHS trusts, housing organisations and universities as well as local authorities and potential conflicts of interest.

MPs complained some advisers used "authorised and regulated by the FSA" in their letter heads when the provision of this kind of advice was not regulated.

They welcomed the intention of CIPFA to produce more information to local authorities.

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