Hoban unveils plans to disband FSA

26 July 2010 | By Natalie Thomas

Mark Hoban, financial secretary to the Treasury has today launched the government’s consultation on the implementation of reforms to financial regulation, which it estimates will cost the industry £50m to implement over three years.

The document sets out detailed proposals for reform of the financial services sector, first announced by the chancellor in his Mansion House speech on June 16 2010.

The chancellor set out plans to overhaul the system of financial regulation giving the Bank of England powers over macro prudential regulation through a newly established Financial Policy Committee, which will be established on an interim basis from Autumn 2010.

The consultation invites views on this proposal in addition to plans to create a new prudential regulator under the control of the Bank of England headed by a new deputy governor the first of whom will be current Financial Services Authority chief executive, Hector Sants, who will be responsible for supervising the safety and soundness of individual financial firms.

As well as a new Consumer Protection and Markets Authority to act as a single integrated regulator focussed on conduct in financial markets.

In the paper the government says it intends to consult on the merits of a transfer of responsibility for consumer credit from the Office of Fair Trading to the new CPMA.

The Treasury also proposes breaking up the Financial Services Compensation Scheme in order to eliminate the current situation of cross subsidy between different business types.

The new CPMA will be independent of government, and will take the corporate form of a company limited by guarantee, financed by the financial services industry.

The government will legislate to make the CPMA subject to audit by the National Audit Office.

The government does not envisage that the proposed reforms to regulatory structure will in themselves change the conditions which firms have to satisfy to obtain authorisation from a regulator but there may be higher costs in obtaining authorisation for firms that need to apply to the PRA as that body will also need to consult the CPMA on certain aspects of the application.

It says based on preliminary estimates from the bodies concerned, this is expected to be of the order of £50m spread over about three years.

Hoban says: “The coalition government is delivering on its commitment to reform the financial system, to avoid repeating the mistakes of the recent financial crisis and to ensure that taxpayers are protected.

“Today is a crucial milestone in our programme of reform. To take this forward, we would welcome the input of everyone who has an interest, including regulators and the regulated community, to ensure that we get the design right.”

Readers' comments (16)

Dazed & Confused | 26 Jul 2010 10:49 am
Well for starters how about employing ONLY people with RELEVANT HANDS ON EXPERIENCE? True this would mean that there would be a need to be selective about who was employed to work for the new regulator, and we would have to move away from the old 'jobs for the boys' regime we currently have...it would also mean that very few of the current staff of the regulator would get their old jobs back...now that WOULD be a real shame!!!!
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Anonymous | 26 Jul 2010 10:52 am
The people at the top of the FSA are responsible for the fiasco's we have seen in the financial markets over the last few years. If the Government are serious about breaking up the FSA, then why not start with a CLEAN sheet and get rid of Sants et all and put people in who understand and want to have a working relationship with the industry for the benefit of the consumer. That would send the STRONGEST signal yet that the Govenment DO MEAN to overhaul the regulator and do things THEIR way, and not just churn out the same old same old with a new name...!
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Anonymous | 26 Jul 2010 11:02 am
Call me old fashioned (or cynical) but is this going to be just window dressing, Blair/Brown/Mandelson style?
Will this lead to the same old people being employed with same old gold plated pension schemes, in the same sort of roles, with the same unbridled powers, able to act in the same old way as prosecution, judge, jury and executioner? But at an increased cost to the IFA?
Or will we see a change for the better?
And this time will they listen to the advice they get from pratitioners instead of just ignoring it, as in the past?
We shall see.
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chris | 26 Jul 2010 11:07 am
You know what, I give up. No body gives a hoot about brokers and consumers, its all about Banks and FSA and how they between tham can look after themselves and their cushy jobs with high incomes. Come on vince Cable, you seam to be the only person with any morals and common sence but you are clearly being supressed. I think if Vince Cable was given more support and encouragement we may actually get someone with the power to sort this mess and get some reallity back into Financial Services.
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Alan J Nadin | 26 Jul 2010 11:22 am
What are we getting for £50m?

The very first questions before any reform continues is; WIll you be using the existing FSA Staff, if so how many and will it be within the same building with new stickers on it for the name change? Because £50m sounds like a hell of a lot of money to put new stickers on windows and stationery if it is!!
I appreciate there is a lot more to it than than, but how can we be sure it wont be just rebadged?

This, I think will set a theme for what we should expect. Please would you comment on this Mr Hoban, it is important and can be answered without affecting where the reform reaches, but sets a crucial tone in the discussion before it starts.
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Here's hoping | 26 Jul 2010 11:30 am
Can I have the job of designing their new logo, got to be worth a £1m at least! Do they need to be in the same building as well, hmmm...same staff, same desks, new name...I really hope it doesn't end up this way, otherwise its a complete waste of money and doesn't protect anyone.
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Andrew Hall | 26 Jul 2010 11:56 am
Whatever happens it has to be better than the FSA we have now and the change in regulator can't come soon enough.
Do you think there'll be a chance of us being able to produce IDD's, RWL's and TCF charters that clients will actually be able to understand rather than the confusing 'mandatory paragraphs' that compliance firms insist we include to keep the FSA happy and our 'fairly treated' clients confused?
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Just a thought | 26 Jul 2010 12:04 pm
Here's an idea! If we are to have a new regulator, lets save some money! How about terminating the lease on those nice expensive offices in Docklands and finding new premises for the new style regulator in an area of urban regeneration?

Will this happen...not an icecreams hope in hell!
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Crazy gang IFA member | 26 Jul 2010 12:04 pm
More political posturing and self justification, together with special report writing and expensive consultations. All sounds too complicated and expensive. Do we really need all this. most of the hard work has been done. People in the UK are now receiving advice within the most regulated regime in the world. This is just a 'jobs for the boys' job creation scheme.
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Anonymous | 26 Jul 2010 12:06 pm
either way whatever happens you can bet "we brokers" will end up footing the bill with ever increasing fees paid to this "new body" as they wish to call it because we all know it is the FSA in another guise!
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