The FCA’s current objective of protecting and enhancing confidence in the UK financial system should be replaced with the objective of maintaining a fair and transparent market for consumers.
Which? Consumer’s Association has recommended a change in the single strategic objective of the Financial Conduct Authority with chief executive Peter Vicary-Smith saying the current objective of protecting and enhancing confidence in the UK financial system should be replaced with the objective of maintaining a fair and transparent market for consumers.
It was thought that an objective to protect and enhance confidence in the system could encourage the regulator to keep problems out of the public eye, a tactic which does not benefit consumers. In the long term, fair and transparent markets are considered a more effective way to build confidence in the financial system.
Vicary-Smith said: “(Protecting and enhancing confidence in the UK financial system) is absolutely the wrong objective. It should be to maintain a fair and transparent market in financial services. If you want confidence in there, it should be fair and transparent markets which lead to justifiable confidence.”
Christine Furnish, chair of Consumer Focus, agreed with this statement and added that a reluctance to upset confidence could cause its own problems if it made the regulator reluctant to intervene in emerging problems before they blow up.
A practical way to implement the suggested new objective of transparency could be for the FCA to publish lists of products it finds problems with; in much the same way as the Food Standards Agency does now. This idea was suggested by Paul Lewis, presenter of BBC Moneybox, who said: “Do we have any less confidence in companies because we know they have withdrawn food? No. But speak to the FSA and it will not tell you what products it has discussed or withdrawn.”
The positive effect increased transparency can bring to a situation such as this is emphasised by the IMF, which says: “transparency by central banks and financial agencies responsible for the supervision and regulation of financial institutions and markets can also foster more informed market expectations and greater public accountability”.