The Treasury Committee has demanded a written response from the Financial Conduct Authority on several aspects of regulatory change for UK banks, following the FCA’s decision to fine Lloyds Banking Group more than £28 million in December 2013.
In a letter to FCA chief executive Martin Wheatley, committee chairman Andrew Tyrie MP asks for “clarification” on a number of key points, including who may be held accountable for future failures in the banking sector, and how remuneration in the financial services sector will be controlled in the years ahead.
Commenting on the letter, Mr Tyrie said: “Banks have rewarded poor behaviour, causing losses to their firms, their reputations and their customers. In some cases, remuneration structures encouraged behaviour which added great risk to the financial system.”
The letter and comments came ahead of Mr Wheatley’s visit to the committee on February 4th, when he was asked about several aspects of the FCA’s regulatory regime for processes including the advised and non-advised provision of products over the internet.
He was also asked about what might happen in April, when the FCA takes over regulation of the consumer credit market from the Office of Fair Trading.
Mr Wheatley estimated that up to three in ten firms might withdraw from the market under the FCA regime, due to affordability issues and aspects pertaining to continuous payment authority.
We have already seen that this is the case at CPA; while we are ready for the transition to FCA regulation, which takes place formally on April 1st 2014, we are seeing some other firms withdraw as licensing costs are much greater than under the OFT.
This will leave those firms unable to handle recovery claims and collections activities for clients who are themselves regulated under consumer credit legislation, meaning they will be unable to pursue any such claims until they find new, authorised collections agents.