The Treasury Committee of the House of Commons published its 20th Report on the Retail Distribution Review: Government and Financial Services Agency Responses to the 15th Report from the Committee.
The Committee’s report accompanying the publication of the responses is as follows:
“The FSA made its initial reply to our Report by means of an embargoed response rejecting the idea of a one year delay to the RDR before our Report had even been published. We deprecated the FSA’s action in making such a response. It gave the impression that no adequate consideration had been given to the arguments for the delay we recommended.
This action and the response that we have now received illustrate some of the concerns about the accountability of the Authority and its successor, the Financial Conduct Authority, to Parliament and the Treasury Committee which we will address in our forthcoming inquiry into the new FCA.
The Financial Services Authority has shown some signs of further thought in its response. In paragraph 20 it says that it will consider flexibility on a case-by-case basis for financial advisers who for personal reasons are unable to meet the end-2012 deadline for the new professional requirements. In paragraph 21 it says that it is consulting on a further work-based assessment for those who do not wish to sit an examination, which the FSA believes would be particularly helpful for more experienced advisers.
However while we note these initiatives, they are very limited. In particular we very much regret that the FSA has not accepted our recommendations that the implementation of the Retail Distribution Review be delayed by 12 months, or that non-qualified advisers be able to operate with a system of proper supervision beyond the implementation date. We repeat our concern that the main purpose of the RDR, namely consumer benefit through better choice and competition, will not be served if its introduction leads to a substantial loss of advisers and firms.”
The Committee Chairman, Mr Andrew Tyrie MP, said: “Our exchanges with the Financial Services Authority about the RDR will inform the approach we take in ensuring high levels of accountability are put in place for the new Financial Conduct Authority”.
Excerpted from FSA's Response: European and international issues
The FSA and its successor bodies will always be faced with difficult decisions over whether to proceed with UK specific legislation quickly, or wait until things have cleared at a European level. The FSA though should act wherever possible to remove consumer detriment in financial services, as it has in this case (Paragraph 89).
44. We agree that the FSA should act to protect UK consumers where problems have been identified in a market, rather than waiting for any new EU to come into force.
45. The FSA launched the RDR in response to both market participants’ and our own observation of significant problems in the UK market for retail investments. The new standards have been carefully developed on the basis of evidence, market analysis and extensive consultation in order to deliver effective and targeted protection for consumers. We welcome the TSC’s support for our decision to act ahead of the EU to strengthen protection for UK retail investment customers.
46. We will continue our regular dialogue with the European Commission and other EU institutions and regulators to ensure compatibility as new proposals are developed. Where necessary, we will also seek to influence the EU agenda to ensure UK interests are both protected and enhanced.
© United Kingdom Treasury
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