One of the successors to the Financial Services Authority, the FCA will have the power to temporarily ban products without consultation and will also be able to mandate the inclusion or exclusion of specific product features.
In a memorandum submitted to the Financial Services Bill committee, which is scrutinising the legislation establishing the FCA, the ABI set out its key concerns.
It said the FCA was being established with an “unnecessarily adversarial remit”, suggesting this could lead to a difficult relationship between the regulator and regulated, “with little benefit to the consumer”.
“We have concerns about the proposed product intervention powers which, if they are retrained, should clearly be used only as a last resort,” it said.
The ABI also expressed concerns about the new regulators’ relationship with European authorities.
“The arrangements have been written on the assumption that the UK is a stand-alone jurisdiction, with the EU-related points added as an afterthought,” it said.
“This is an inadequate reflection of the major role that the EU plays in practice in setting standards for financial services, and the British industry would be better served by a more constructive dialogue with the EU authorities.”
Other areas touched on by the ABI in the memorandum included the need for stronger accountability of the Financial Ombudsman Service and better regulation of claims management companies, which it said are “fostering a compensation culture”.
