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Has the FSA conceded defeat to Europe?
by Michelle McGagh on Jul 29, 2010 at 12:44
With just 24 months to go before it is replaced, the Financial Services Authority (FSA) obviously doesn’t think it’s worth fighting for UK regulation.
Judging the communications from the regulator in the past two days, it has well and truly conceded defeat to the EU.
The most recent announcement from the FSA is that it is changing the remuneration code it set out to keep an eye on huge bank bonuses to include advisers.
At a stretch I can understand the FSA looking at bank advisers' remuneration (which it has already pledged to do in a review of sales incentives) but to include small adviser firms' bonus levels is frankly ridiculous.
When I asked the FSA why advisers were being included I was told that Europe has said everyone who falls under capital adequacy rules had to comply with the remuneration code.
And what Europe says goes, even if this will include another layer of unnecessary reporting for the adviser.
Yesterday’s comments from Linda Woodall, acting director of small firms at the FSA, on why the FSA can’t bring unregulated collective investment schemes under regulatory control, again shows the EU is ruling with an iron fist.
She said: 'The regulator has a bit of a fine line to walk as we don't want to wipe out innovation, and increasingly regulation, and what the FSA can and can't do, is being driven from outside the UK.’
Fair enough Linda, we'll just let firms keep pushing these high risk, high commission products to consumers in the name of innovation then!
Europe is notorious for its lack of common sense (remember the ban on bananas that were too bendy?). The FSA should be fighting Europe for regulation that is appropriate and that will benefit the financial services sector in the UK.
As an aside, I wonder if the FSA will be applying this tough new remuneration code to its own staff…
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11 comments so far. Why not have your say?
paolo standerwick
Jul 29, 2010 at 13:20
The UK advisers never benefit from EU law as we get the worst of all. We have the FOS and the FSA ignoring ECHR for advisers, European advisers selling old fashioend products which can be passported into the UK legally without FSA intervention, whilst we have to dance to the FSA tunes on new unproven intitiatives which keep coming out of Canary Wharf.
report thisJulian Stevens
Jul 29, 2010 at 13:22
On the one hand, the FSA grumbles about having to comply with directives from the EU's central regulatory body which happen not to accord with its [the FSA's] own agenda yet, on the other, it's happy enough to gold plate everything else that it does like the look of. The proposed RDR is a classic case in point and may well be significantly pruned and diluted to force it into line with MiFiD (so don't abandon hope just yet).
As for the spirit and the letter of UK Law, well those are just things that we don't have to worry about because FSMA 2000 (and subsequent updates) says we can do pretty much what we like with impunity.
Oversight from the NAO is going to be a major pain in the bum as well. Maybe the wheels on the gravy train really are starting to shake loose at last.
report thisDee
Jul 29, 2010 at 13:57
Let's replace the FSA with a nice little office in Bruxelles! And keep the buggers there!
report thisChris Chris
Jul 29, 2010 at 14:04
Who will regulate the regulator to ensure that they do their jobs as outlined?
WHO WILL STOP THE BOSSES AT THE FSA EARNING 600K PLUS.
They all make me want to bloody scream...they are all waste of boody space..
report thisChris Chris
Jul 29, 2010 at 14:05
should read bloody space..
report thisJonnieB666
Jul 31, 2010 at 11:05
Whilst still studying in the hope of passing the necessary exams in time, I believe it would be foolish of me not to prepare for the possibility that this might not happen. Does anyone know how to go about setting up a firm outside the UK and passporting in?
report thisHarry K
Jul 31, 2010 at 12:53
In answer to the headline question:
If it hasn't, it should.
European precedence is a fact, so why not just let them get on with it? We can then reduce the size of our regulatory apparatus - I guess a dozen people should do the trick and it can all be handled from Brussels with the staff here just passing it on.
That should save a few quid all round I would have thought.
report thisJohn Whipple
Aug 02, 2010 at 17:44
An awful lot of time and our money has been wasted discussing and setting up alternatives to the EU regulation when all a long we are going to have to do as we are told in the end.
Anon 666
Pass-porting
As I understand it you would have to either set up a firm in say Ireland but the directors would have to be resident and then you could passport into UK.
Or find an existing firm and get affiliated to them and use their passport.
report thispaolo standerwick
Aug 03, 2010 at 08:28
To John Whipple. No you don't have to be resident in Ireland to set up a compnay there as the company law changed there last year. I know because i've already looked into this.
You just have to make surely the Irish Regulator is satisfied you set up and trade with the intention of marketing to Irish residents. UK could become secondry.
report thisBanged to Rights
Aug 04, 2010 at 11:08
That's interesting Paolo but it might be difficult to prove that the UK would be secondary market ?
Possibly a web based business might qualify ?
report thisJefroc
Aug 04, 2010 at 16:26
Michele - why spoil a good article with a silly dig at the EU over bendy bananas. All these silly stories (bananas, cucumbers, sausages etc) are mainly 'leaked' to see if gormless journalists fall for them. I am sure you are not gormless so please don't give people the opportunioty to get the wrong impression.
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