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FSA calls for stronger enforcement powers for new regulator
by Daniel Grote on Sep 23, 2011 at 15:09
The Financial Services Authority (FSA) has called for stronger enforcement powers for new regulator the Financial Conduct Authority (FCA) allowing it to publish warning notices on firms without consultation.
Under proposals outlined in the draft Financial Services Bill, the FCA will be given the power to publicise warning notices, but the regulator will be required to consult the firm affected beforehand.
The FSA said in its submission over the bill that the new powers would be ineffective unless the FCA could publish without consultation. '[Consulting firms] will seriously undermine the effectiveness of this power as we believe most, if not all, firms and individuals are likely to object to details of the warning notice being published,' it said. 'This in turn is likely to lead to satellite litigation with firms and individuals seeking injunctions through the courts to restrain the authorities from making matters public. We do not believe this would be in the public interest.'
It also raised concerns over the FCA's role in authorising individuals. The Prudential Regulation Authority (PRA), the macroprudential regulator under the new regime, will be responsible for authorising members of firms under both FCA and PRA regulation. But the FSA said the FCA should also have a role.
'Our experience has shown that the attitude of firms' senior management towards conduct issues can be a real driver of the way firms treat their customers - which points towards the need for FCA consent to the appointment of such individuals,' it said.
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