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Andrew Tyrie MP warns over government's regulation plans

by Iain Martin on Sep 30, 2010 at 11:06

Andrew Tyrie MP warns over government's regulation plans

Arguably the most powerful backbencher in the House of Commons, Conservative MP Andrew Tyrie is a fiercely independent figure.

Tyrie (pictured) has attracted attention for campaigning for victims of Equitable Life and championing the cause of extraordinary rendition.

Now chairing the Treasury Select Committee, Tyrie faces a big challenge in grappling with the coalition government’s plans for the future of regulation, banks and financial institutions.

Chancellor George Osborne cannot expect an easy ride from Tyrie, who has already boosted the committee’s power since taking over the chair in the summer by securing a veto over the appointment and dismissal of the Office for Budget Responsibility chairman.

‘Our job as a committee is to make sure the wider public interest is properly protected and that the government is forced to explain the decision it takes,’ he said.

FSA flawed from the start

Tyrie said the government needed to avoid repeating mistakes made when the Financial Services Authority (FSA) was formed as it re-shapes financial regulation.

He said flaws in the Financial Services & Markets Act, which laid down the foundations of the FSA, were apparent at the outset, arguing it created a vacuum of leadership in financial regulation.

‘I looked at it at the bill stage as legislation came through the house a decade ago,’ he said. ‘I said no one was in charge and it will be found wanting,’

A watchdog needs teeth

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12 comments so far. Why not have your say?

Tim Atkinson

Sep 30, 2010 at 12:13

It sounds like a desent discussion may at last commence around the area of protecting the public trhough decent regulation.

Noone in this industry is against regulation, those of us having been here prior to the 1986 act have benefited hugely from the changes that it has brought about, however the last decade has not been the best for advisors, the general public or the country as a whole.

It has been intersting on this site in recent months the differing ideas that have been put forward, I hope that they have been noted and will be passed on to the Tresuary Select Committee. The issue of funding the regulation is the fisrt item they need to address along with funding for associated bodies.

Product authorisation, regulation and dare I say product compensation levies need to be visited within their early discussion.

The RDR and it's affect on the market, good and bad, and the need for a level playing field from everyone's point of view.

Let us hope the industry as a whole may be served by a better regulation which will in turn protect the individual investor.

I have my doubts, but I hope it can be achieved. It will only be acheived if and when these subjects are discussed that thsoe involved provide balanced and carefulkly thought feed back and not lose the opportfunity by using it to gain points over certain sectors or individuals.

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Julian Stevens

Sep 30, 2010 at 12:14

Is Mr Tyrie unaware of the Statutory Code of Practice for Regulators, the fact that the FSA completely ignores it and that no body appears to make the slightest effort to enforce it? If he's genuinely concerned about better regulation (for all parties) this might not be a bad place to start.

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brian hammond

Sep 30, 2010 at 12:32

Accountability will be assured if the regulatory costs are borne by the taxpayer, who afterall, is the one being protected. Maybe then, we will see proper regulation of banking practise.

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Phil Castle

Sep 30, 2010 at 13:02

No taxation without representation. Where have I heard that before? Oh yes, the American war of Independance. We currently have our own, with the FSA imposing taxes (regulatory fees) and looking to increase FOS limits from £100k to £150k without resolving the issue of the right to a trial on the FACTS rather than the opinion of an adjudicator and without any appeal otehr than a JR. At to that the refusal to recognise the need for a sensible approach to a longstop (notice I say sensible approach as there are alternatives to a straight 15 years, but they don't want to even discuss it)

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John Smyth

Sep 30, 2010 at 14:28

The main reason for the failure of regualtion was that ex and seconded bank employees were and still are appointed to almost all of the senior positions within the regulatory organisations. Self regulations never works. Poachers do not good gamekeepers make and leopards do not change their spots. Not enough independent consumer crusaders were or are appointed.

Another reason for the failure was that there was nobody prepared or able to stop the banks throwing money at the public on credit cards and mortgages. Vince Cable, Mervyn King and many others were warning against this three or four years prior to the bubble bursting but nothing was done.

Yet another reason was that the so called clever employees of the banks and other financial institutions (All those people who should be grateful that their companies were not let go bust, who are now threatening to take their expertise ! abroad. I wish they would but without any of my money.) did not look inside the sack containing the lethal packaged mortgages and derivatives they were buying and selling. They were happy to buy pigs in pokes so long as their pay and bonuses were increasing.

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Anonymous 1 needed this 'off the record'

Sep 30, 2010 at 14:34

Totally agree about Tyrie saying FSMA was flawed from start.

FSMA 2000 is the root and branch of many of the UK's serious financial services problems leading to the ruination of a whole industry over the last ten years. We cannot control the vagaries of market uncertainty but whatever the FSA tries to control and interfere with, it ends in disaster. A costly disaster. Unelected, unaccountable, always right never wrong, oppressive, unrepresentative, a destroyer of laissez faire industry competition by distorting markets (Stakeholder etc), secretive, totalitarian in its deliverance of sanctions fines and remedial actions, ruling its members by fear, the FSA and even in its newest form has no place in a democratic UK society.

Agree that strong regulation is required to protect consumers but the right sort.

Unlike FSMA 2000 you start with how the way the FSA is constituted. The Labour party had no mandate to deliver such an all powerful machine through law that is not even accountable to its voters, the UK tax payers, the members whose fees and fines keep it on the road.

Politicans and Party Treasury Select Committee members were concerned at the time 1999-2000 about this 'entity' being created yet they are the ones who should have stood up for democratic values instead of whitewashing Stalin like powers without question of the unintended consequences. It is those politicians that are to blame for the FSA as a state within a state and above the Law due to FSMA 2000.

Abuse of democratic power does not get as serious as what the FSA has evolved into, though the FSA is actually still in its early days of what it could evolve into unless checked. Can you imagine the FSA powers in other democratic countries? Can you imagine hundreds of years of shaping a democracy and the principles of Magna Carta being wiped out by one all powerful regime. Another 20 -30 years of FSA governance in its current form would turn the UK Financial Services insustry into the police state unless its undemocratic source of power and constitution is checked now.

Start by dismantling the current constitution of the FSA through repeal of its powers. Then you will have the eyes and ears of the financial services industry ready to embrace change as a force for good not because you are adopting change by being forced to a unrepresentative totalitarian power that has lost its way.

The FSA has become and has always been an unrepresentative biased powerhorse that no one has any power to change or challenge, without fear of retribution.

Left unchecked in its current form the UK Financial Services Industry will be killed off and end up being our weakest Balance Of Payments Invisible not our strongest. It is never too late to start the process of reverse, the sooner the better whilst we still have a some form of declining industry left.

Which financial corporation or investor would want to invest or come to the UK

to base their business?? Answer, not many at all.

OK, to rephrase this - how many existing Financial Services companies currently in the UK will want to relocate their business away from the UK to avoid a Financial Police State mentality which is costly and is killing off free spirit of enterprize that used to place UK Financial Services as the world leader?

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Dan Rear

Sep 30, 2010 at 15:00

Agree with all that Anon 1 (why do you remain anon tho'?).

Too much consumerism is a bad thing. No wonder the Pru, for all its faults, wants to become more Asian focused. And no wonder too that AXA's going, Aegon possibly too, and why Resolution's growing. Britain's closed for profits, in FS as well as many other areas. Ask our Business Secretary...

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Ross Perry

Sep 30, 2010 at 15:36

The only way to ensure that the public at large saves, is to ensure that IFAs are not dismantled any further from what is being activated by RDR proposals. When was the last time anyone read positive comment about banks? Are we sure the public really want a choice of advice from only banks or big nationals? If that is what happens, we are all in trouble.

Ross Perry

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Julian Stevens

Sep 30, 2010 at 15:54

To Ross Perry ~ the banks don't provide advice (Lie No. 1 that needs to be demolished) and, if the recent demise of A2O is anything to go by, the big national IFA firms are no safer than the rest of us (nor would I argue that they should be).

Though I'm very much aware that networks aren't for everyone (and the father of all networks has declared them to be redundant), I cannot help but think that the cottage industry IFA backed by the resources and supervision of a large support organisation may very well be the best model for the future, at least as far as non-corporate clients are concerned. The shame of it is that the FSA seems determined not to see it that way.

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Anonymous 2 needed this 'off the record'

Sep 30, 2010 at 16:01

Julian, I do not understand where you get the idea that banks do not give advice, they certainly think they do, they wrote to me following an edowment maturity to offer me an appointment with one of their advisors. What does that mean?

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Anonymous 3 needed this 'off the record'

Sep 30, 2010 at 16:26

Everyone has heard of the term "if it is not broken, do not fix it". I am guessing that at the beginning of the year there were about 39,000 IFAs. Because of RDR, we must have had at least 10% fallout by now. This is going to keep going down and down until the biggest boys and girls win the ultimate prize. At the expense of? Yes you guessed it the public at large, These people are the ones we are supposed to be protecting. No one would have an argument in raising standards, but it is only a good and preferably experienced IFA that is good for the health of an individual requiring advice. Talk about a Yo Yo. The Personal Investment authority were Rule based, The FSA Principle based, but now because of the banking crisis are now rule based.

For those IFAs left in 2013, who, apart from high net (and probably existing clients) are going to afford to pay for advice? In any event these types of clients do not usually require any advice on how to save. They generally need wealth appreciation and tax planning. The vast majority of the rest of the country need advice on how to go back to a savings culture rather than one of constantly using credit cards. In a fee only culture, they will either be unwilling to pay for advice, or find it unaffordable.

For those IFAs age bracket say 55-65 running a mature business(and have been doing so for years as a "fit and proper" person presumably they now have to ignore clients and go on a full time study course or vice-versa.

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Julian Stevens

Sep 30, 2010 at 16:43

To Anonymous 2 (incidentally, the best track off Focus 3) ~ the answer to your question is so obvious that I don't quite understand why you've asked it. No offence or anything.

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