Ministers considering penalising Financial Services Authority over ‘misjudgements’

Economic Secretary Melanie Johnson said ministers are awaitingthe conclusion of FSA consultations on arrangements for dealingwith complaints against them.

She was commenting in the Commons on a Tory proposal that theproposed independent complaints investigator should have thepower to recommend the amount of ex-gratia payments toaggrieved parties.

MPs are considering 114 pages of potential changes to theFinancial Services Authority Bill, including 480 amendments -around 250 from the Government – and 43 new clauses amidstprotests at the way many were put down less than a week beforethey were due for debate.

The government defeated the Conservatives by 267 votes to 141against the ex-gratia proposal and went on to rejectConservative pleas to limit the immunity of the SA againstreview by the courts in cases alleging where the FSA wereaccused of being ‘reckless’

.Johnson pointed out the Basle principles on banking regulationrecognise the need for immunity to prevent the authority beingstrangled by potential law suits and red tape.

The sole exception is in the case of bad faith.

Tory spokesman Howard Flight said that if there was to beeffective legal immunity there must be an entirely independentsystem of complaints with the ability to suggest fair recompensewhen a business had been damaged by incorrect or wrong conductby the FSA.

Shadow Chief Secretary and accountant MP David Heathcoat-Amorysaid it was objectionable for individuals or firms to have theirreputations ruined by a the FSA “recklessly” launching aninvestigation without having any redress.

Financial Services Authority appoints new general counsel

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