| LONDON, June 13
LONDON, June 13 Britain's new markets watchdog
lacks clarity and must be bolder about protecting consumers hit
by years of misleading sales tactics, two former top
policymakers said on Thursday.
The financial crisis prompted Britain to scrap the
decade-old Financial Services Authority and replace it with the
Financial Conduct Authority in April.
It supervises some of the world's biggest foreign exchange,
stock, bond, commodities and derivatives markets.
FCA non-executive chairman John Griffith-Jones said in his
maiden speech that he was developing a "radar screen" to spot
problems earlier and stamp out bad behaviour such as Libor
interest rate rigging.
But Hector Sants, who headed the FSA until last year, and
Paul Myners, financial services minister during the financial
crisis, said the FCA had its work cut out.
Myners said moves toward tougher supervision began under the
FSA and that Griffith-Jones had made a safe speech that left him
a little disappointed.
Britain's banks have so far paid out over 10 billion pounds
in compensation for misleading consumers about loan insurance,
the latest in a string of sales scandals spanning two decades.
Myners said many of the directors and non-executives at
lenders that sold loan insurance were still in their jobs.
"I would have liked to have got a sense the FCA had a more
challenging position. I didn't really hear that," Myners told
the event organised by CityUK, which promotes Britain as a
"I fear the FCA, like all regulators, runs the risk of being
captured by the regulator. I did not hear a radical agenda."
Sants, part-architect of Britain's new supervisory system,
said there were several areas where "greater clarity" was needed
to help restore public trust in financial services.
"We need to understand a bit more clearly what the FCA's
risk tolerance actually is," Sants said.
The FCA's approach to the wholesale market and the extent to
which consumers are responsible for what they buy were also
unclear, said Sants, who heads compliance at Barclays Plc
"To reset the agenda between firms and consumers you have to
be bold," Sants added.
Etay Katz, a financial services lawyer at Allen & Overy,
said there was a "waiting game" as banks sought clarity from the
FCA on how they can develop new products.
"The trick is to look at the radar and capture the right
target and not use a scattergun approach and create a lot of
collateral damage along the way," Katz said.
Griffith-Jones, a former head of KPMG accountants in the UK,
said it was early days and the FCA board and executives were
determined to get it right.
"I think we have got off to a respectable start. Even if you
have doubts, give us the benefit of them," he added.