A report recently published from a Treasury Select Committee (TSC) meeting in November 2012, indicates that there are concerns about the capacity of the new arrangements to take control of financial business regulation any better than the FSA! The TSC held a hearing with John Griffith-Jones, the FCA Chair Designate, in November to assess his experience and his views on issues relating to the FCA.
In its report, the TSC warns Griffith-Jones not to underestimate the challenges he will face as Chairman of the Financial Conduct Authority in ensuring the new regulator is “radically different” from the FSA.
The TSC says: “What is needed from him is to make the FCA radically different from its predecessor. The challenges Mr Griffith-Jones faces should not be underestimated. He will need to demonstrate he has grasped their scale. The new board needs to develop a markedly different culture from that of its predecessor, which was deeply flawed. It must not be a group of like-minded financial services industry insiders but composed of people with a varied professional background as well as board experience. It must provide robust internal challenges to decisions of the FCA senior executives, something of which there has been little evidence in the past at the FSA.”
The committee points out that he lacks experience of the consumer conduct issues which will form the bulk of the FCA’s work. It agrees with Griffith-Jones on the importance of the FCA board being able to challenge senior management decisions, but has also raised concerns about whether the FCA will take its objective to promote competition seriously. It says while Griffith-Jones has pledged to “champion” the competition objective, this promise from a part-time chairman is “unlikely to be enough” without the same commitment from senior management within the FCA.
There is a perception that the Financial Services Act, which establishes the new regulators in law, has fallen short of putting in place fully the measures necessary to properly hold the FCA and PRA to account. The Bank of England’s oversight of the FCA needs to be both rigorous and accountable, to ensure that UK regulatory performance is better than that demonstrated by the current Financial Services Authority.
