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January 17, 2013 11:59 pm
The chairman of the Financial Conduct Authority will face a tough task if he is to live up to his pledge that the new watchdog will take a radically different approach to protecting consumers, say MPs.
In a report on the chairman and his FCA role, published on Friday, the Treasury select committee expresses particular concern that the new authority might not make use of its responsibility to promote competition. This objective was added to the bill creating the regulator at the committee’s specific request.
The FCA is due to take over responsibility for investor protection and markets from the Financial Services Authority in April as part of UK regulation reforms.
The MPs welcome John Griffith-Jones’s appointment as chairman as part of a badly needed shake-up of financial regulation. However, they express scepticism that he and the board can force through the fundamental changes the committee believes are needed.
“The challenges that Mr Griffith-Jones faces should not be underestimated. He will need to demonstrate that he has grasped their scale,” says the committee.
Mr Griffith-Jones, a former chairman of the UK arm at KPMG, lacks hands-on experience with many of the consumer protection issues that the FCA will tackle, the report says. It also raises questions about how much he can accomplish in a non-executive part-time role. Lord Turner, the FSA chairman, has executive responsibilities.
On the issue of competition, Andrew Tyrie, the committee chairman, says: “Getting competition into the culture of the FCA will be a huge challenge for its leadership. The Treasury committee has expressed deep misgivings about the conflicting priorities inherent in the FCA’s hierarchical objectives. Not least among its problems is that they may lead to inadequate attention being paid to the competition objective.”
An FSA spokesman said: “The FCA will be a new organisation with new objectives, which parliament has just finalised, so we are now designing how the FCA will carry out this new remit.
“John Griffith-Jones and Martin Wheatley [the FCA chief executive], along with the FCA’s future senior leadership team, are committed to ensuring the FCA can demonstrate how it is delivering on its objectives, including competition.”
The FSA recently hired Chris Woolard as director of policy, risk and research. Mr Woolard, formerly Ofcom’s group director for international and regulatory development, will help to spearhead development of competition policy when he moves to the FCA.
In December, the FSA also launched its first competition study into general insurance policies sold as add-ons to other purchases.
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