The mutuals trade body believes that the proposals will concentrate power in the Bank of England, significantly increase running costs and complexity for institutions which will ultimately result in greater cost to consumers, and overlap responsibilities.
The BSA said that the contrasting objectives of the Prudential Regulation Authority and Consumer Protection and Markets Authority (CPMA) will externalise problems that under the FSA have been managed within a single body.
In its response to the Treasury Consultation Paper on financial regulation, the BSA has focused on four main issues: the need to build diversity into the financial system; the potential cost and complexity of the new arrangements; the inappropriateness of the CPMA’s proposed role as “consumer champion”; and Bank of England and FPC accountability.
Adrian Coles, director-general of the BSA, said: “We are especially urging the Treasury to undertake careful planning to ensure that the new regulatory burdens do not disproportionately affect smaller firms.”
Coles added: “We seem to be building a more concentrated regulatory system, with a greater amount of power in fewer hands and, at the same time, building a more concentrated banking system with greater market share among fewer institution; this could lead to a huge concentration of risk.”
