Remember this date – 28 February 1999. It should be ringed in the diary of anyone who may be concerned about the effect of the Financial Services and Marketing Bill.
This substantial document is aimed at addressing market confidence, public awareness, protection of consumers and a reduction of financial crime.
It gives the Financial Services Authority, which replaces all other regulatory bodies in the provision of financial services, a wide range of powers and functions.
The notion of protecting consumers cannot be argued with. But as with pension mis-selling, the increasing regulatory powers over providers of financial services are in danger of becoming unbalanced, so practicising accountants and independent financial advisers should take note.
Under the terms of the Bill, the FSA will have extensive powers to intervene in the business of authorised firms to correct any non-compliance, to contain continuing loss or risk of loss to consumers, secure redress for consumers, discipline those involved in misconduct, bring criminal proceedings for certain offences and impose civil fines for market abuse.
The language is that of carrot and stick. The FSA expects organisations to co-operate on a voluntary basis but will not hesitate to use its intervention powers where it considers this is appropriate.
It will ensure that losses are made good where consumers lose out, and ultimately there is a super-ombudsman to take complaints to, who replaces all other ombudsmen involved in financial services.
The government is concerned to give the impression, at least, that the FSA’s powers are transparent, proportionate and consistent.
This is particularly so in the case of the new ombudsman because of the danger that the FSA will turn out to be judge, jury and executioner.
With a likely limit of #100,000 on awards for financial loss, a new company will be set up and board members appointed in an operation employing between 250 and 400 staff on a budget of around #15-20 million.
The FSA’s approach to date has been to tar the good along with the bad and involve the public in a campaign that has as much to do with raising the profile of the regulators as it has to do with the problem of pensions mis-selling.
Similar principles are adopted in the present proposals for the wider regulation of the financial services sector, but at least the FSA is inviting comments on the consultation papers it has issued relating to intervention, investigations, redress, discipline, market misconduct and the FSA decision-making process.
If you wish to make representations, you should look at the relevant consultation paper, but do not miss the 28 February deadline if you are concerned about any of the above mentioned and wish to be heard.
Andrew Davies is a partner in City law firm Fishburn Boxer
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