FSA admits it blocked new lenders from market

10 November 2009

Sants says: “In the deposit taking industry, we have worked to limit or reduce retail depositor exposures by forcing firms to exit the best buy tables or the market completely and we have deterred several new entrants to the market.”

This week’s Mortgage Strategy warns that the FSA is putting an increasing number of obstacles in the way of would-be-lenders.

Sants also says the FSA will be increasingly proactive in testing risks inherent in products from their development and using techniques such as mystery shopping to test the true outcome for consumers.

He wants to see a cultural and behavioural change within the financial industry to ensure the lessons of the crisis provide the outcomes society expects.

He says: “There remains, I believe, an absence of the acceptance of collective responsibility for what has happened.  I personally remain unconvinced that all senior management have taken on board the need to change and operate in a genuinely different manner.”

Sants says the regulator has already introduced a tougher approval process for senior management and has seen a number of applicants withdraw as a result of greater challenge, but is now looking to explore an individual’s ability to create a strong ethical framework.

He says: “Acknowledging that culture is driven by those at the top of an organisation, the FSA will be opening the debate on how it can asses a senior executive’s impact on an institution’s culture as part of its authorisation regime.  This topic will be included in a forthcoming FSA discussion paper.”

Hants also admits that the regulator’s Treating Customers Fairly initiative has not always been successful.

He says: “Historically the FSA was, in practice, operating a ‘twin peaks’ system. The oversight of the domestic institutions focused on the ‘Treating Customers Fairly’ programme. However, this focus has not delivered the outcomes that consumers deserve.”

He says ‘old style’ consumer protection regulation was largely reactive not proactive.

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