In its response to HM Treasury’s Financial Services Future Regulation Framework Review, PIMFA highlights the fact that there is now a clear opportunity to create a regulatory architecture that improves supervision and enforcement and leads to better outcomes for consumers.
PIMFA welcomes many of the changes proposed by HM Treasury with respect to the regulatory framework and the accountability mechanisms to which regulators are subject. However, PIMFA has also made a wide-ranging set of recommendations that it believes would lead to an environment in which regulators can be more efficient, agile and forward-thinking and in which financial services firms can continue to thrive.
In particular PIMFA is calling for:
• Replacing the Financial Conduct Authority’s (FCA) consumer protection objective with one that focuses on achieving good outcomes for consumers across the whole of their experience of financial services.
• Statutory mechanisms that enable HM Treasury to order a review of the regulator’s operation, not just in cases of one-off failure, but where it appears the regulator has consistently failed to meet some part of its remit.
• A properly resourced sub-committee of the Treasury Select Committee devoted to scrutinising the work of the regulators and how they use their powers.
• The FCA to focus on engaging more with industry so that it really understands firms’ businesses, rather than proceeding directly to regulatory action.
• A new statutory objective that requires regulators to take account of the global competitive position of the UK financial services industry.
• Statutory panels to be fully independent of the FCA so as to guard against regulatory capture and encourage greater industry engagement.
Tim Fassam, Director of Government Relations and Policy at PIMFA, commented: “PIMFA and its members understand that the UK needs a strong regulatory system to protect its status as a leading centre for wealth management and financial advice.
“However, Brexit provides an opportunity to reshape our current regulatory environment to ensure that it better reflects the needs of UK consumers and firms. We want to see a regulator that is effective and uses consistent mechanisms for supervising regulated markets and firms, while also ensuring that bad actors are removed from the industry.
“Changing the regulator’s focus to good outcomes would ensure we avoid the assumption that a customer who has not taken action is protected. We hope this would lead to the industry and regulator working together to increase the take up of advice as well as boosting saving and investment.
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