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Cautious optimism from trade bodies on FCA plans

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  • 16/10/2012
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Cautious optimism from trade bodies on FCA plans
Mortgage trade bodies industry have reacted with optimism to the release of the Financial Conduct Authority’s conduct approach.

The ‘Journey to the FCA’ paper revealed the FCA’s projected working methods and revealed the new regulator would spend more time reducing risks to consumers in general rather than on individual company visits.

Adrian Coles (pictured), director-general of the BSA, said that he was pleased to see the needs of consumers taking a big role in the new organisation’s thinking.

“We welcome publication of the ‘Journey to the FCA’ document which outlines their proposed approach. This is a helpful step as we get closer to their official launch next year.

“We are particularly pleased to see that putting customers at the heart of the business is a key element of the FCA’s approach. This underpins the way our members, as customer-owned organisations, do business.

“As with any change we do have some concerns, notable among them the apparent ‘guilty until proven innocent’ approach to future enforcement publicity. Sadly, in the days of 24/7 media and twitter, recovering a reputation after such an announcement – if events prove this warranted – will be very difficult. The innocent may well pay for the sins of the guilty.”

Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), added: “It is vital the new regulatory system helps rebuild the flourishing mortgage market so necessary for households, the housing market and the economy. IMLA’s aim will now be to engage constructively with the regulator to secure outcomes that work for consumers and firms.

“An initial review of the consultation paper suggests the industry will have concerns over the division of labour across the regulatory landscape, the trade-offs between tighter regulation, innovation and competition, and how the FCA will keep a track of market developments.

“Considerable weight is being placed upon developing a new understanding of consumer attitudes and behaviour, a far from easy task.”

The FCA is inviting comments on the document by 14th December 2012 and is preparing a series of engagements with the industry in the coming months.

Chris Hannant, policy director at AIFA, said the new regulator must have increased accountability and hoped more stringent rules about its conduct would follow.

“The introduction of a new regulator offers an opportunity to set out clear criteria that we can use to measure its performance. Regulatory authorities have previously had far too little public accountability for their actions.

“We would like to see clear and transparent outcomes set for the FCA that it can be judged on. At present the proposed criteria are far too subjective.

“The role of the regulator should be to foster a successful financial services sector and encourage consumers to take positive decisions about their finances. We need clear and measurable objectives, such as the levels of savings and protection consumers have.

“The regulator has made clear it will take a more interventionist approach. A key measure of the success of this approach will be a reduction in compensation claims and overall levels of compensation. The regulator should be accountable for delivering on this objective.”

Paul Smee, CML director general, added: “The FCA will have an armoury of new consumer powers at its disposal, some of which – like product intervention – are untried and untested.

“Firms will be looking for as much information and help as possible from the FCA, to ensure that they do not inadvertently fall foul of the regulator’s expectations.

“The challenge, for firms and the FCA alike, will be to meet the regulator’s aspiration of allowing businesses room to try new ideas, while at the same time minimising uncertainty for them about whether those ideas will successfully leap the regulatory hurdles. We will engage with both the FCA and the PRA, and hope for a high level of dialogue and communication with both regulators.”

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