FSA admits it blocked new lenders
Share
Speaking in London today, Hector Sants, chief executive of the Financial Services Authority, says the regulator has purposely deterred several new entrants to the market.
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.
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
Readers' comments (10)
Anonymous | 9 Nov 2009 4:16 pm
I think the only tool lacking in the list above used in the FSA's current operations is the setting of the interest rates!
Do not be eluded to think that increased competition, and therefore a UK recovery will be forecoming any time soon.
Unsuitable or offensive? Report this comment
Ben Gould | 9 Nov 2009 4:35 pm
Which planet do these people live on?
Unsuitable or offensive? Report this comment
Paul Violet | 9 Nov 2009 4:48 pm
OK, so the FSA have acted like a buch of martians for years now, with no clue as to what is happening in the real world, and causing (and still doing so)untold and unneccesary hardships. BUT, they're right to make sure that the decision makers have got the message that there are some things that have to change, because we WILL go gradually back to the old bad habits if the FSA revert to their previous standards. Problem is that their track record of making the right decisions for the industry isn't good.
Unsuitable or offensive? Report this comment
Carl McGovern | 9 Nov 2009 4:50 pm
Well there we go Hector Sants has effectivley discouraged would be lenders from entering the market, creating more competition for the government owned dual pricing lenders.
Perhaps he should have a look at how well the FSA have performed with the TCF and maybe take a vote on how many consumers are now better off because of the culture he wants to create. I somehow fail to see what the agenda is here. Is he protecting the consumer or making life impossible for Brokers, lenders and everyone else in the industry?
Unsuitable or offensive? Report this comment
Michael White CEO Emailmortgages | 9 Nov 2009 5:01 pm
Yes I am being cynical, but it occurs to me that the FSA view of the perfect world is somewhat at odds with reality?
I commented recently the FSA have established a culture of self-aggrandisement? Strange approach, given the constant acknowledgement of what has not been delivered or achieved.
Yet, the programme continues, I now begin to think in terms of a self-fulfilling prophecy, consider this definition:
“In the beginning, a false definition of the situation evokes a new behavior which makes the original false conception come 'true'. This specious validity of the self-fulfilling prophecy perpetuates a reign of error. For the prophet (FSA) will cite the actual course of events as proof that he (FSA) was right from the very beginning”
OK maybe a little extreme, but genuinely there appears to be a continuum of errors emanating from the FSA'a corridors of power. Hector Sants describes the FSA approach as “increasingly proactive”. However, I would suggest a far more accurate description would be “increasingly interventionist”, which is very worrying indeed.
Unsuitable or offensive? Report this comment
Anonymous | 9 Nov 2009 5:58 pm
When we're all forced out of this industry by ever increasing regulation, costs and plain barmy enforcement I wonder who the FSA will blame then?
Thousands of low income consumers have little or no protection since the demise of the home service industry, no real choice in the market, have seen estate agents and brokers disappear from every high street, and have the banks to turn to for their financial advice. Now if ever there was a paradox?
Lunatic's running the asylum....!!!
Unsuitable or offensive? Report this comment
Anonymous | 9 Nov 2009 6:21 pm
FSA often talk about TCF, yet they seem to fail to realise that dual pricing and the eliminatin of brokers is not going to deliver TCF. We all know that bank advisors only look after the bank. To truely deliver TCF they should turn the industry on it's head and insist that you have to see a broker before making a product choice. It'll never happen, it's pie in the sky, but so is TCF and the FSA are too blinkered to see it
Unsuitable or offensive? Report this comment
Stuart Duncan | 9 Nov 2009 6:25 pm
Like several other posters, I find this very worrying. It seems that the FSA are on a mission to damage competition and are still trying to stop the credit crunch from starting by imposing sanctions that should have been considered five years ago but are now unnecessary and destructive.
Unsuitable or offensive? Report this comment
Michael Norwood | 10 Nov 2009 9:53 am
This really shows just how badly the FSA have been,and lack of a coherent strategy.We just lumber from one crisis to another - each sparking some new initiative.Now TCF hasnt worked??? How much time and money are they going to get through before we pull the plug.The FSA are looking for a scapegoat to hang the 'crisis' on,thereby deflecting interest away form their own failings.There should have been resignations across the FSA board big time.Hector Sants is a lucky man.
Unsuitable or offensive? Report this comment
Anonymous | 11 Nov 2009 11:14 am
I thought the Govt wanted to increase the number of deposit takers/banks to bring in competition and spread the risk of 'too big to be allowed to fail'.
Going to be difficult if the FSA won't allow new entrants. Doh...am I missing something here - like joined-up thinking.
Unsuitable or offensive? Report this comment