LONDON Oct 16 Britain's new market watchdog
will spell out on Tuesday how its sharper teeth to ban products
and challenge business models should make the 26,000 firms it
will supervise think twice about ripping off consumers again.
Martin Wheatley, the head of the Financial Conduct Authority
being launched in early 2013, will tell a Thomson Reuters event
at 0800 GMT how powers to take harmful products off the market
would work in practice.
"We will make the intervention first and then we will carry
out the consultation and the cost/benefit analysis," Wheatley
told an industry event last week.
The new approach aims to draw a line under 20 years of
mis-selling in Britain and make sure consumers are offered
products that are suited to their needs.
The cost to banks of compensating people mis-sold loan
protection insurance alone will top 10 billion pounds.
The FCA will take on the conduct, enforcement and consumer
protection operations of the Financial Services Authority when
the unitary supervisor is scrapped early next year.
The FSA's broader supervisory powers over banks and insurers
will be handed to a new unit at the Bank of England.
This "twin peaks" set-up seeks to increase the intensity of
supervision which was found wanting ahead of the financial
The dual regulatory approach has already been introduced on
a "virtual" basis by splitting up the FSA staff into conduct and
prudential units ahead of a formal switchover next year.
Wheatley is expected to say that many of the changes made by
the FSA, in particular the "credit deterrence" policy of taking
a harder line against insider dealing and market abuses, will
continue under the FCA.
The FSA has been collecting record fines from financial
firms, in particular Barclays for rigging the Libor
The government has just announced that fines in excess of
enforcement case costs will in future go to the treasury, a step
which may make the watchdog pause before taking on complex cases
that require many resource-intensive months to probe.
The financial industry will study the document Wheatley
publishes on Tuesday to see how it will pursue three core aims
of trustworthy markets, promoting effective competition and
requiring firms to put consumers at the heart of their business.
The industry is already alarmed the FCA can tell the public
far earlier if it is taking action against a financial firm.
(Reporting by Huw Jones; Editing by David Cowell)