Financial secretary to the treasury outlines new regulation plans for firms
Treasury financial secretary Mark Hoban has confirmed that the new Consumer Protection and Markets Authority will take on responsibility for the Financial Ombudsman Service and the Financial Services Compensation Scheme.
Hoban told Parliament today that the CPMA would take on the FSA’s existing responsibilities for the FOS and FSCS, as well as the newly created Consumer Financial Education Body.
"The CPMA will regulate the conduct of all firms, both retail and wholesale – including those regulated prudentially by the Prudential Regulation Authority – and will take a proactive role as a strong consumer champion," he said.
"It will have a strong mandate for ensuring that financial services and markets are transparent in their operation, so that everyone – from someone buying car insurance to a trader at a large bank – can have confidence in their dealings, and know that they will get the protection they need if something goes wrong.
"The CPMA will regulate the conduct of every financial service business, whether they trade on the high street or trade in high finance. We need to ensure that this body has a tougher, more proactive approach to regulating conduct and its primary objective will be promoting confidence in financial services and markets.
"The CPMA will maintain the FSA's existing responsibility for the FOS and oversee the newly created CFEB, which will play a key role in improving financial capability. The CPMA will also have responsibility for the FSCS, but given the important role it plays in crises, it will work closely with the Financial Policy Committee and PRA."
Hoban also announced further details of the FPC, which will take on responsibility for "macroeconomic and financial issues that may threaten stability."
He said it will have the power to require the new PRA to implement its decisions. An interim FPC will be set up in the autumn, ahead of legislation and will be directly accountable to Parliament.
The PRA will act as a subsidiary of the Bank of England. Hoban said it will conduct prudential regulation of sectors such as deposit-takers, insurers and investment banks.
Bank of England governor Mervyn King will chair both the FPC and PRA. The new BoE deputy governor for prudential regulation, Hector Sants, will also sit on the FPC, and is chief executive of the PRA.
The government will publish a detailed policy document before the Summer recess before a full consultation process with the necessary primary legislation set to be passed within two years.