Advisers warned to get ready for change

Advisers warned to get ready for change


Following the publication of the Conservative Party’s White Paper entitled: “From crisis to confidence: plan for strong banking”, regulatory consultancy, The Consulting Consortium has commented on how it will affect advisers.     

The main provisions of the White Paper are to abolish the Financial Services Authority (FSA) and the Tripartite regime it operated with the Bank of England and the Treasury and to create a strong and powerful Bank of England with the authority and powers necessary to ensure financial stability, bringing together the operation of monetary policy with banking regulation.


The Conservative Party aims to make the Bank of England responsible for prudential regulation including all banks, building societies, insurance companies and ‘other significant’ financial institutions and would also give the Bank of England authority to regulate pay structures, risk, complexity and size of financial institutions.


A Consumer Protection Agency (CPA) that will bring together in one place the consumer powers currently split between the old FSA and the Office of Fair Trading would also be implemented.


As for the troubled banking institutions, whose risky lending policies have been lambasted in the crunch, the Conservatives will demand that banks set aside much more of their own money for their risky lending as a form of insurance policy.


Joanne Smith, Managing Director at The Consulting Consortium, said: “Given the Conservative Party’s performance in the opinion polls and the necessity to hold a General Election within the next year, this White Paper cannot be ignored as there is every likelihood that we will have a Conservative Government in 2010. Those in financial services should therefore ready themselves and their businesses for considerable change.


“The impact on the Retail Distribution Review (RDR) is of particular interest. Under a Conservative Government, with product providers being regulated by the Bank of England and IFAs and Stockbrokers regulated by the CPA, there is scope for further consideration of the Distribution model and how it should work to best serve the industry and consumers alike.


“The CPA will not necessarily change the educational requirements of the RDR for intermediaries however fee-charging and the relationship between providers and intermediaries may be impacted upon. In addition the increase in the industry levy will put further financial pressure on firms of all sizes.”

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