Mortgage News
New regulator ‘will not tolerate’ repeat offenders
Firms that continue to have issues picked up on by the Financial Services Authority (FSA) are likely to be treated more harshly by the regulator’s successor, according to one of its directors.
From next year, the Financial Conduct Authority (FCA) will take over some responsibilities from the FSA and it is set to take a more interventionist approach than its predecessor.
Speaking at an FSA conference this week, Tracey McDermott, acting director of the enforcement, explained how firms would not be allowed to “constantly bump along the bottom”.
She said: “We will be much more prepared to intervene and limit business where each time we raise an issue or take action against a firm when we see it fixing only the immediate problem but failing to think about how the underlying causes – whether they be culture, product design, training or reward – might read across and cause similar problems in other areas.
“I expect the FCA to have a lower tolerance for repeat offenders.”
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Opening the conference, Martin Wheatley, chief executive-designate of the FCA, explained how the new regulator’s product intervention and competition powers would be implemented.
“We know that there have been concerns that the FCA may be heavy handed when using these new powers,” he said. “But the point I would like to stress is that while we will have these new powers, they won’t always be the first thing we reach for.
“We will continue to work with firms to ensure they are clear about our expectations and how they need to behave. However, we will use these powers when needed – they aren’t just window dressing.”
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Among the powers the FCA will have will be to ban products for up to 12 months without consultation.
Concluding her speech today, McDermott explained why the industry could not be trusted to be left to its own devices to design products that meet consumers’ needs.
She said: “History has demonstrated that, left to its own devices, the industry does not design such products. Instead, it sells products to the wrong people at the wrong time in the wrong way.
“And no doubt some hackles are now being raised in the room as this is, of course, a sweeping generalisation. But unfortunately – as with any stereotype – it is very difficult to shift.”