In today’s white paper, the government said the new Financial Conduct Authority (FCA) will have a “strong new role” in promoting competition in liaison with the Office of Fair Trading as part of a wider blueprint for regulatory bodies.
However, in setting out the body’s new role, the government stopped short of requiring the FCA to have competition as one of its core objectives and said its strategic and operational objectives will remain its priority.
“The FCA will be under a statutory duty to exercise its general functions in a way which promotes competition so far as is compatible with its strategic and operational objectives,” the paper said.
It said its “primary” tools will be regulatory and used to promote transparency in the provision of services. This includes a a more proactive approach to dealing with the conduct of financial firm with a “lower risk threshold” for potential consumer detriment.
“The government’s view is that the new competition duty provides the right mandate for the regulator- it means that, in discharging its general functions the FCA must promote competition unless this would be incompatible with its strategic and operational objectives,’ the government said.
Earlier this year, the government proposed merging the OFT and the Competition Commission to create a single Competition and Markets Authority to promote competition policy.
Today, the government said the FCA will have a “specific new competition power” to require the Office of Fair Trading to consider whether structural barriers are creating competitive inefficiencies in specific markets.
“At a time when there is greater focus than ever on the role of competition in UK financial services, a credible and proportionate strengthening of the role of the regulatory system in promoting competition is a key element of the Government’s reform programme,” today’s paper said.
The Treasury added it supports the view that competition is the “best driver” of good consumer outcomes.
