Hung parliament deals blow to Conservative scheme for reform of financial services regulation
Conservative plans to reform financial services regulation “are dead” irrespective of the outcome of last week’s general election, regulatory experts have predicted.
The Conservatives promised in their manifesto to scrap the FSA and transfer regulation of the insurance industry to a new Consumer Protection Agency.
As Insurance Times went to press, the Liberal Democrats were still negotiating with the Conservatives over whether to form a coalition government.
But Richard Hobbs, director of London public affairs firm Lansons, said that the uncertain outcome of the election meant that the Conservative plans to reform financial services regulation “were now dead”.
The ex-head of insurance at the Department of Trade and Industry said that the Financial Services Act 2000, which established the FSA, was a large and complex piece of legislation.
He said that it could take up to four years to draft a replacement.
In addition, the Liberal Democrats oppose the Tories’ plans to scrap the regulator.
Conservative financial services spokesman Mark Hoban has said privately that the reform could be carried out using secondary legislation, which avoids the need for full-blown parliamentary bill.
However, solicitors Beachcroft partner Matthew Rutter questioned whether the FSA could be abolished and a new agency authority founded using secondary legislation.
A fresh general election is widely expected within the next year, following the failure of any party to win 326 seats or more – the number needed for a majority – at last week’s election.
For more, click: Will the FSA stay or go?