The Treasury has published plans for a radical overhaul, including added protection for consumers, for financial regulation in the UK in the form of the Financial Services Bill, published today.
The Bill outlines plans to transfer responsibility for consumer credit from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA), in a move to provide stronger protection for consumers.
Financial Conduct Authority
The duties of the Financial Services Authority (FSA) are being handed over to the FCA and Prudential Regulation Authority (PRA). The FCA will become the new consumer focussed watchdog.
Which? chief executive, Peter Vicary-Smith, said: ‘Which? is delighted the government has listened to our calls for a tough financial regulator that fights on behalf of consumers.’
He added: ‘The transferral of consumer credit to the FCA means it can give greater scrutiny to this market and encourage responsible lending.’
Consumer credit is currently regulated by the OFT. This means that if you are in credit in your bank account, it is regulated by the FSA, but if you enter into an overdraft, your bank account is regulated by the OFT. The new rules will place all regulation for this under one body.
Mr Vicary-Smith also warned that the government needs to make sure that the FCA has these powers as soon as possible and that it delivers on its promises.
The Financial Services Bill must go before parliament before it becomes law.
Greater financial scrutiny
The FCA will be more rigorous running checks on firms, offering greater level of investigation and more scrutiny.
The FCA will have the ability to ban products or certain features of products. This will help prevent future mis-selling scandals, such the experience of payment protection insurance mis-selling to those not eligible to claim on their insurance or made to believe they would not be eligible for credit without the policy.
Watchdog not Lapdog
Which? launched a campaign last week to call for a tougher regulator with our ‘Watchdog not Lapdog’ campaign. We’re asking for a strong, open and proactive regulator.
We’ve already had over 3,500 people sign our pledge in support of the campaign and had over 100 photo entries for a dog to front our campaign.
- Sign the pledge to declare your support of the Watchdog not Lapdog campaign
- Find out more about our lobbying for change in the Financial Services Bill
- Share your views on our Watchdog not Lapdog debate on Which? Conversation