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Don’t regulate for another banking crisis, says FSCP

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  • 24/06/2011
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Don’t regulate for another banking crisis, says FSCP
We must learn all the lessons from the FSA's experience of regulation, not just aim to avoid another banking crisis, said a consumer group.

At the Financial Services Authority’s (FSA) Annual Meeting, Financial Services Consumer Panel chair, Adam Phillips, said there is a danger that consumers will be cut out of some of the key decision making processes influencing the cost and fairness of financial services.

“There is a danger that the present reforms focus too much on the recent crisis in the banking industry. Failing to learn all the lessons from the FSA’s experience of regulation will mean that we are doomed to repeat them,” said Phillips.

Any reform to UK financial services regulation should place consumers at the heart of the process. It is consumers who have suffered the most in recent years from poorly performing financial institutions,” he said.

The panel, which advises the FSA on its consumer obligations, said the new regulatory structure and plans were in danger of throwing out the regulator’s achievements as well as the problems.

The new structure may rely too heavily on people from different organisations working constructively together, he said.

“The Panel is concerned about the restrictions on the FSA’s ability to use the information it holds on companies as a regulatory tool which appear to be written across to the new legislation establishing the FCA,” he said.

The make up of the proposed Financial Policy Committee (FPC) Board was another problem, he thought, because it ran the risk of replacing industry specialists with inexperienced Bank of England executives.

“We will continue to engage actively in the debate as the Bill goes through Parliament,” he said.

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