The Financial Services Authority will close down with effect from 1 April, to be replaced by the new Financial Conduct Authority.
The Financial Conduct Authority (FCA) opens its doors for business for the first time this week. To mark the event, executive director Richard Lloyd has written an open letter to Martin Wheatley, the chief executive of the FCA.
New regulator mustn’t make the same mistakes
The letter begins with an appeal to Mr Wheatley to make sure that the FCA becomes a ‘watchdog that can learn new tricks and succeed where the Financial Services Authority (FSA) has failed’.
Mr Lloyd warns against complacency and urges the FCA to stay firmly focused on consumers, saying:
‘The FSA failed to protect consumers from poor financial products, dodgy sales practices and bad customer service. We ask you to learn from the mistakes of the past and ensure that consumers come first.’
Tackle banking culture
Mr Lloyd explains: ‘The FCA needs to send a clear message that bad behaviour will not be tolerated. We want to see:
- A tough new code of conduct to change the culture of banking
- More severe penalties for banks and executives that breach the rules including larger fines
- Individuals responsible for failures held to account.’
Stand up to the banks and promote competition
Mr Lloyd writes: ‘The FCA can use competition to transform banking if you:
- Push forward reforms to reduce barriers to entry for new firms to give consumers more choice
- Make sure all charges and costs are clear and transparent
- Make it easier for consumers to compare banks and avoid being ripped-off by poor value products.’
Be open and act on problems before they spread
Mr Lloyd adds: ‘There were plenty of opportunities to spot the problems with PPI mis-selling before it developed into such a huge failure. The FCA must:
- Be prepared to act quickly and issue warning notices
- Remove misleading adverts and name the firms and products involved
- Publish the results of all mystery shopping exercises.
No more light-touch regulation
Light-touch regulation for the financial services market hasn’t worked. Which? wants to see the FCA make a big change in banking and put customers first.
In response to the news that the FSA was to split in June 2010, Which? launched its Watchdog not Lapdog campaign for a strong, open and proactive regulator.
The campaign received more than 5,500 pledges of support, with 3,450 supporters emailing their MP asking for their support. In total, 75 MPs agreed to support the campaign.
- Find out more about the Which? campaign for Big Change in banking
- Read more about the FCA taking over from the FSA
- Which? wants the new regulator to be a Watchdog, not a Lapdog